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COMPLETE  NOTE  ON  PENSION  OPTIONS  AS PER  MOU dated 27.11.2009

by

 R P Agrawal

Recently concluded talks with IBA on 27.11.2009 opens a new era for the life of lacs of bank employees who did not opt for pension due to confusion created by certain union leaders and high interest rate regime prevailing at the time of offer for pension option in 1995/1996.

After struggle of over 13 years success story was written on 27.11.2009 when MOU was signed by 9 constituents of UFBU and IBA. Unfortunately SBI lead unions did not participate in final round of talks as SBI staff has pension facility.

Certain section of bank staff is under the impression that pension option has been signed at the cost of staff that had already opted for pension. Their contention is that pension option should have not opened when management had earlier offered the same. Those employees who did not opt for pension should suffer for their folly.  Further their contention was that instead of pension option union leaders should have fought for better wages in line with Central/State Government employees.

 In this context it is clarified that bank employees get their salary out of profits of banks while Central/State Government employees’ get their salaries from consolidated funds of India. Bargaining power of bank employees has eroded over the years due to computerization, advent of private sector banks and partly due to our self interests. This factor has to b kept in mind while appreciating/criticizing the recently concluded MOU.

For unions it was a fight for survival as interest of about 3 lac employees was involved for another option of pension. Union leaders could not have lost sight of the fact that about 3 lac employees and their families were looking at them for breakthrough in getting pension option. Ministry of finance was also with the demand for granting another option.

If one read the MOU signed on 27.11.2009, it is clear that financial burden of another option will be shared by beneficiaries and not by bank employees who had already opted for pension. They are not to wary with addition load. I give below my observation on MOU.

There are 4 types of bank employees.

1. *Existing bank employees who are in service and opted for pension.
2. *Existing bank employees who are in service of the bank and not opted for pension
3. Bank employees who had retired and getting pension
4. Bank employees who had retired without pension and got their PF( own and bank contribution)

* Existing employees have been defined as bank employees who will be in the service of the bank on the day of signing of Joint note/final agreement. (Joint note/final agreement has to be signed on or before 27.11.2010 as per MOU). Thus bank employees who will retire in Jan 2010 will also be called as retired employees.

The MOU does not cover bank employees who had retired and getting pension (No. 3 above). Their demand of merger of DA is not covered in the MOU. This issue may be taken up in next agreement due in 2012 as at that time each employee will be pension optee and bargaining power will be much more. Members may know that Parliamentary committee has agreed for merger of DA of bank pensioners. Time will definitely come when DA of pensioners will be merged.

Now I deal with remaining cases.

1. Existing employees who have opted for pension will share 3% of basic pay and 3% will be shared by banks to bridge the existing gap of pension fund. They have nothing to do with pension option and recovery of any additional amount from them.
2. Existing employees who are in service of the bank and not opted for pension will be given another pension option. Number of such employees is about 272000.As per MOU, total financial burden is estimates as Rs. 17190.00 crore out of which Rs. 11532.00 crore is the bank contribution to be refunded by employees who will opt for pension. The gap Rs. 5658.00 crore and Rs. 343.80 as loss on account of incomplete data will be shared by banks and staff who opt for pension in the ratio of 70 and 30. Staff contribution will be Rs. 1800.54 crore. If we divide Rs. 1800.54 crore by 272000, individual employee’s contribution will be Rs. 66196. The unions and management has to divide this amount equitably and the issue will be addressed when final agreement is signed.
3. There are about 60000 bank employees who did not opt for pension and got their PF. All bank employees who had retired after last option (1996) will be given another pension option. Total financial burden on this score is estimated as Rs. 4774.29 crore out of which Rs. 1657.79 crore bank contributions will have to be refunded by retirees who opt for pension. Remaining amount of Rs. 3116.50 crore will be shared by banks and new pension optees in the ratio of 70 and 30. Retirees have to share Rs. 934.95 crore. If we divide this amount by 60000, per employee burden comes to Rs. 155825. IBA and unions have to adopt methodology in such a way that amount is shared by each retiree in equitable manner. Tough there is no mention of recovery of interest on bank contribution, yet in my opinion bank contribution may be recovered with interest for the sake of equitable recovery.

During talks held on 9^th Dec 2009, it has been clarified that pension option will be given to all the staff members who had retired on account of superannuation, VRS, special VRS. Cases of dismissal, resignation, compulsory retirement way of punishment will not be covered.

Recoveries from bank employees on account of pension option will be made from arrears payable.

There is no mention in MOU about commutation of pension but since pension option will be given under the provisions of existing pension regulations1995, retirees need not to wary about commutation as it will be given if desired.

I appeal to each employee who is/was in the service of the bank as of 01.11.2007 to keep ready their month wise emoluments duly signed by respective branch managers so that there is no problem in payment of arrears. Likewise all the retiree staff who wish to apply for pension option should keep aside bank contribution received by them and their addition burden which may be about 15% of bank contribution.

I hope that above write up will dispel doubts of bank employees who are suffering with various notions/misgivings.

Readers may give their comments on above write up at my email rpagl130@gmail.com

 (R P Agrawal)

Ex- staff

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