The case regarding 100 percent D.A. neutralisation (A.B. Kasturirangan & others Vs Canara Bank & others ) came up for hearing on 29th June 2018, in Supreme Court of India. Regular hearing of this case could not take place on the date. Hon Supreme Court directed to list the case in the month of Jan 2018.
Saturday, June 30, 2018
Wednesday, June 13, 2018
Updation of Pension in Banks - Letter from Shri C N Venugopalan former Director State Bank of Travancore and Ex-Manager Union Bank of India
C N Venugopalan (Former Director, State Bank of Travancore and Ex-Manager, Union Bank of India) |
“Nandanam”, Kesari Junction, North Paravoor, Kerala -683 513 Phone: 0484 2447994 Mob: 9447747994 |
No.160611 11thJune, 2018
To:
All beneficiaries of Joint Note and original pensioners
Updation of Pension in Banks
Retired bank employees / organizations are clamoring for up-dation of pension for years unable to establish that it is an already sanctioned benefit vide regulation 56 and demanding it as a fresh claim, thus strengthening the stand of the managements in not giving it.
Regulation 56 viz. Residuary Provision states that “in case of doubt in the matter of application of these regulations, regard may be had to the corresponding provisions of Central Civil Service Rules, 1972 or Central Civil Services (Commutation of Pension) Rules, 1981 applicable to Central Government employees with such exemptions and modifications as the bank, with the previous sanction of central government, may from time to time, determine. So long as IBA / banks have not sought any exemption or modification, it is in derogation of regulations that up-dation of pension is denied so far for years.
The regulation makes limpid, beyond nay conundrum, that bank pension has invariably to be on the pattern of pension of central government employees and non-revision of pension with each bipartite settlement (unlike in the case of revision with each pay commission in the case of central civil pension) is in gross breach of the Pension Regulations put in place in banks with the nod of the Parliament. Denial of revision is apparently in derogation of the pension regulations and rebelliousness to the Indian Parliament.
Regulation 56 is an inbuilt provision for up-dation of pension; but all are under an impression that it has to be sanctioned by IBA / government not knowing that it is a statutorily vested benefit. The demand for it without seeking enforcement of regulation 56 as per the intentions is preposterous.
In terms of regulation 3, all categories of employees had to exercise option within 120 days of notification, i.e. on or before 26.01.1996. Unless the regulation 3 is amended, no one can be granted an option after 26.01.1996. the option given under the joint note is ultra virespowers of IBA/ banks. Having granted pension to 50,000 plus retired and conferred the coverage to about 5,00,000 employees on rolls, IBA / banks can have no roll back on this.
Banks granted pension to VRS retirees who had 15 years of service when qualifying service for pension to VRS retired was 20 years in terms of regulation 29. The pension so paid was unauthorized by pension regulations and pension fund trust rules. Pension Fund Trust has no provisions to pay such pension. To escape from the accountability aspect of the erroneous payments, banks amended regulation 28 relating to superannuation pension by adding to it a clause that “with effect from 1stsept.2000, pension shall also be payable to an employee who opts to retire through any scheme formulated y by the bank with the sanction of the government, after purring in a service of 15 years. The net result is that regulation 29 on pension on Voluntary Retirement remains the same and the pension so paid is still unauthorized. Confusion was created in regulation 28 on Superannuation Pension by adding to it that an employee who has put in 15 years of service can get pension on superannuation. Are these not stupidities?
Clause 10 of Joint Note stipulates that IBA should send it to government for its approval and further action in terms of section 19 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980. Section 19 (4) of the Act stipulates that the amendment to regulations carried out has to be laid by the government, as soon as it is made, in the houses of the Parliament for 30 days and will have effect only if approved by the Houses , or be of no effect, if not approved. The Joint Note framed on 27.04.2020 has not so far laid in the houses albeit lapse of 6 years and cannot be laid forever immediatelyon account of passage of six years. It is thus obliterated and is void. It is on the basis of the void joint note that banks denied pension from the date of retirement to the arbitrary date 27.11.2009 fixed in it to employees retired prior to the date of the Joint Note.
Regulation 5 (3) fixes the banks as sole contributor to Pension Fund. And the contribution banks make is not a gratuitous one, but is the statutorily payable EPF contribution, which the banks were to make pursuant to EPF and Miscellaneous Provisions Act, 1952 prior to notification of Pension Regulations. Any contribution to Pension Fund is thus the deferred wages of the employees statutorily payable by banks . It is not the money of the banks; but the money of the employees.
The contribution at 56 percent of EPF paid on retirement in the case of retired employees and 2.8 times pay for November, 2007 in the case of employees on rolls raised by banks on the basis of the Joint Note for granting second option is inconsistent with regulation 5.3 and regulation 11. The boards of banks have no powers to make such regulations / amendments that prejudice the validity of what is done earlier under a regulation vide section 19 (1) and 19 (4) of the banking companies ( acquisition and transfer of undertakings) Act, 1970/1980. as such, the Joint Note containing such prohibited covenants can never be placed in the parliament to take its nod. This is why the Joint Note is not so far laid in the Parliament.
If there is any organization i.e. union or association that is worth its name and banner and is having commitment to the members in the industry, it can simply give a notice to the Central Labour Commissioner pointing out the breach of covenant 10 of the Joint Note which makes the Joint Note obliterated and void. If so the amount of unlawful collections made by banks to Pension Fund from retired employees and employees on rolls and the pension denied from the date of retirement to the date 27.11.2009 will become payable back to all, together with compound interest. Pension Fund had been earning income on the unlawful collections at compound rates by way of interest on Pension Fund investments and banks run no loss in making the refund to those concerned.
The Pension Funds of all banks have money enough to pay three to four times the present pension to all their pensioners as the resources are abounding in them and the annual growth can contain such payment with no impact on profits. To cite an example the Pension Fund of union bank had a growth of Rs.. 6574.01 crores in five years after the date of the Joint Note. There are 3,106 retired employees and 17,473 employees on rolls from whom unlawful contribution of Rs. 134.33 crores had been collected on the basis of the Joint Note. After repayment of the amount with interest, which can be contained in a maximum sum of Rs.300.00croes, the five years’ growth will still have a residue of Rs. 6,274.01 crores. This sum can foot payment of arrears of pension with interest to 3,106 retired employees at Rs..2.02 crores per capita. The actual arrears payable per capita will be in the range of Rs.15.00 lakhs to Rs. 35.00 lakhs only. When the amounts can be paid without any pinch either to the bank –as pension is payable out of pension fund with no impact to it – or to the government by way of any budgetary allocation, non-payment is totally meaningless and lawlessness. The present pay out of benefits i.e. pension / family pension is only 23.25 percent of the annual growth ( year ending 31.03.2019). The position of other banks is also similar and all of them can pay two to three times pension to all their pensioners, without affecting profits.
IBAand banks cheated the work force by not granting an option when the government directed IBAto advise all banks to scrap the clause for forfeiture of service in regulation 22 (4) (b) and to give effect to it vide F. No.4/8/4/95-IR dated 24.12.1997 which was received at IBA on 27.12.1997. Giving effect to it meant that an option be extended in the wake of the deletion to those who could not opt when thee deleted clause was present in the regulations. Banks amended the regulation but did not give effect to it, duping the target group. Union Bank amended the regulation on 27.02.1999 and kept it clandestinely in camera until 08.10.2002 and published it with a delay of 43 months on that date. There were no unions/associations who could detect the fraudulent acts / omissions and challenge it.
Section 10 (7) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 empowers the Board of a bank to declare a dividend and to retain surplus profits as reserves in its books only after making due provisions to superannuation funds. Given that the public sector banks had, all along been, declaring dividends to the government, which was applied for paying higher salaries and pension to government employees and for paying salaries to Ministers, MPs etc. all had been robbing bank employees, the Peter to pay to government employees, the Pauls. The bank officer had a higher pay than the government office in the 1970s. When the bank officer drew Rs.500/- the government officer had Rs.450 only. With the nationalisation, an ethnic prejudice that set in the minds of government officials resulted in staggering bank pay on a level with government pay at Rs..725/-. Though parity of reasoning requires that bank pay ought to be protected at the level of pay in government, it is now lesser by Rs..30,000/- to Rs.40,000/- a month. The bank employee worked for six days a week in hectic mode while the government employee worked for five days only in a casual manner. All policies of government are implemented through banks. The government employees merely watch / monitor. The process of nation building was done by bank employees while the government employees are merely regulating and monitoring.
with nationalisation of banks and government ownership, bank employees became quasi-government employees whose salaries are reasonably to be foot by the government. But they draw their compensation out of the profits they make and not from exchequer. They do not pass on the burden to the government. Yet they are given a step motherly treatment by the government, in the matter of compensation for work.
The leaders who have raised hefty subscriptions from members have never lived up to the expectations of members. In signing the Joint Note too, they surrendered even the statutorily vested rights of the members. Their have to be more loyal to the managements that regularly collect subscriptions / levies from members through check off and give it to them. The Leaders of various organizations were of the view that fresh option is not viable in the industry. Much was their concern in not securing fresh option. After fighting for option for some five years after my voluntary retirement at the age of 49, I had to issue a Circular on 10th January, 2006 , country-wide, to appraise the victims who missed the option for pension about the follies of the organizations. The following link will furnish testimony : https://drive.google.com/file/d/0B_UI4pgwLPCjYU9zVHd1azdEdWc/edit?usp=sharing. Please click on it. The issue of option which was dormant till then came into limelight only through this. This only forced organizations, that were silent on it for years to make a demand for it. Though a MOU was signed on 25.02.2008 after three to four agitations to conclude the matter within three months, it took another 26 months to sign the Joint Note on 27.04.2020. And while signing it, the statutorily vested rights of the employees were surrendered. It was the silent, solo, valiant struggle I conducted for a decade that brought 5,00,000 employees on rolls within the abmit of pension again and secured pension to about 50,000 retired bankers who were on cross roads. It is this work that redeemed the right of pension that was lost forever for the bank employees and brought about a renaissance in the industry. Retiree organizations got so much members as a result of second option as otherwise, they would have got scattered away.
Time is not late even now for us and for organizations too. The unions can merely appraise the CLC and ask to set aside the Joint Note on the ground that clause 10 of it is remaining undone and also make a demand for proper compliance with regulation 56. It can take care of refund of the unlawful contributions with interest to all, pension from the date of retirement to all those who are denied it till 27.11.2009 and also up-dation of Pension.
If the banking barons numbering some 100 to 200 can act in derogation of rules and regulations and deceive the vast number of pensioners and employees on rolls with their money power, the deceived have to defend themselves by remaining united and proving their might. If all the victims join together and take legal recourse, nothing is impossible for them. We may be able to hire Prasanth Bhushan, Jethmalani etc also, if needed. We have a strong case and we can fight legally engaging prominent counsels up to the level of Apex Court, in a different way. Sometimes, three to four suits may be required to make claim in each one simple, sharp and indefeasible. If versatile decisions are emerging at High Court level itself, there will be no scope for IBAto fight it in appeal and take it beyond it.
THOSE BENEFICIARIES OF THE JOINT NOTE AND ORIGINAL PENSIONERS SEEKING UP-DATION OF PENSION WHO WANT TO SUPPORT THE CAUSE , CAN BE IN TOUCH WITH - C N VENUGOPALAN WITH UNION BANK OF INDIA , ALUVA, ceeyenvee@gmail.com .
It is not necessary for all to join the writ petitions.
Thanks and Regards
Yours sincerely,
C N VENUGOPALAN
Friday, June 8, 2018
CBPRO Circualr on Honourable Supreme Court Judgement regarding 100% DA Neutralisation
We reproduce below the circular issued by CBPRO on the above subject
Quote
Circular No. 011/2018 Dated: 01.06.2018
TO
THE GENERAL SECRETARIES
Constituents of C B P R O
Dear Comrades,Sub: Honourable Supreme Court Judgement regarding 100% DA Neutralisation.
We refer to our circular no. 010/2018 dated 16.05.2018 on the above subject wherein we gave the brief and operative part of the judgement delivered by the Honourable Supreme Court and assured our members that a detailed circular will be issued after studying and analysing the full judgement.
The Order of the Honourable Supreme Court has shocked the retirees in the banking industry who were hoping for a favourable judgement. We wish to reiterate that the hopes of our rank and file were not unfounded as the same were based on the principles of equity, fairness and reasonableness as provided under Article 14 of the Constitution of India. There were strong reasons to strengthen our hopes on 1st August 2018 after conclusion of arguments before the division bench. It is worth mentioning that after hearing the arguments both the judges had a brief interaction between them and then the bench made
the following observations to the senior counsels of all the parties to the case.
“This court has already dismissed the appeals of retirees against the orders of the High Court of Madras on similar issue and there cannot be two different and contradictory judgements by this court on the same matter. Therefore there are three options:
We recall the earlier order in case of Madras High Court appeal and then pass a fresh order in this case.
We refer this case to a larger bench for disposal.
The appellants in case of Madras High Court order file review petitions and we tag the same with this case after condoning the delay.”
These observations of the Honourable Supreme Court on 1st August 2018 gave enough indications about the directions in which the case was heading. The option 3 of the above was pursued and all the appellants in case of Madras High Court filed their review petitions which were tagged with the case of United Bank of India, the delay was condoned and arguments heard on 23rd August 2018. The Honourable Bench reserved the judgement after hearing the argument of
concerned parties. The judgement was pronounced in Court on 16.05.2018 by allowing the appeals of United Bank of India and others setting aside the judgements and orders of the Honourable Court of Calcutta in appeals and dismissing the writ petition no. 507 of 2012 preferred by respondents namely United Bank of India Retirees’ Welfare Association and others. We feel that the judgement of the Honourable Supreme Court suffers from the following inaccuracies
and inconsistencies:
The Honourable Court has analysed the issue of D.A. neutralisation as per tapered method at different rates vis-a-vis 100% neutralisation and made observations in paras 21 to 25. The analysis under para 21 is erroneous in as much as the issue was not that whatever benefi t was enjoyed by the employees who retired before November 2002 with tapered methodology of D.A. neutralisation was taken away, it was rather the improvement in D.A. neutralisation from tapered to 100% as allowed to those employees who retired after November 2002 was not extended to those who retired before November 2002. Since all the retirees constituted a homogenous group and were getting D.A. neutralisation under tapered methodology, creating an arbitrary classification by fixing 1.11.2002 as cut off date for extending the benefit of 100% neutralisation was not only discriminatory but also violative of the principle laid down by the Honourable Supreme Court in the case of D.S. Nakara.
The Division Bench relied on the judgement in case of Kallakkurichi Taluk Retired Officials Association, Tamil Nadu while observing that the dearness relief is relatable to the cost of living index and varies in direct proportion to the same. It must be borne in mind that dearness relief is an amount paid to the retirees to neutralize the astronomical rise in prices. The object of paying dearness relief is the same irrespective of the date on which the employee retires. Inflation hits the employees who retire before the cut off date as hard as it does those who retire later. Therefore dearness relief cannot be different to two sets of retirees. Holding the distinctions between the pre November 2002 retirees and post November 2002 retirees to be unreasonable, arbitrary and discriminatory. The Division Bench directed the Bank to pay dearness relief to all pensioners at the same rate. It is beyond comprehension as to how such a reasoned and
merited judgement could be set aside by disregarding the principles held in case of D.S. Nakara and Kallakkurichi Taluk Retired Officials Association, Tamil Nadu.
It was held in case of D.S Nakara that if the State considered it necessary to liberalise the pension scheme, we find no rationale principle behind it for granting these benefits only to those who retired subsequent to that date simultaneously denying the same to those who retired prior to that date. If the liberalisation was considered necessary for augmenting social security in old age to the government servants, then those who retired earlier cannot be worse off than those who
retired later. The artificial division has absolutely no nexus to the objects sought to be achieved by liberalising the pension scheme. It is thus clear that 100% D.A. neutralisation being a liberalisation and improvement with regard to calculation of D.A. to the retired employees cannot be denied to one set of retirees on the basis of any artificial and arbitrary classification by stipulating a cut off date. It was also observed that for the purpose of revised computation of D.A.
according to liberalised formula was to extend the benefit of improvement to all existing retirees irrespective of the date of their retirement as they constitute one class and any further division within that class being impermissible.
It was held in case of D.S. Nakara that there could be justification in making a distinction between two sets of retirees and limiting the new retiral benefit to those who retired after the cut off date. But in this case the change in the methodology of neutralisation of D.A. from tapered basis to 100% is an improvement and not a new retiral benefit. Hence an arbitrary and artificial classification based on a cut off date violates the principle held in case of Nakara.
The Honourable Supreme Court has shown an oblivion to the fact that the percentage of D.A. at 0.18% with 100% neutralisation for the present slabs of 1065 works out to 191.70% whereas if the percentage was to be calculated on the basis of tapered methodology for 0.18% upto Rs. 9650 plus 0.15% above Rs. 9650 and upto Rs. 15350 plus 0.09% above Rs. 15350 and upto Rs. 16350 plus 0.04% above Rs.16350, the D.A. percentage would be lower at 162.95%. The similar difference would arise in case of pre November 2002 retirees and hence their effective percentage of D.A. being lower under tapered method would hurt them
as they will be denied D.A. on that component of D.A. which is merged with Basic Pay with effect from 01.11.2002 (2288 points). The differential treatment to the pre November 2002 retirees by not extending the benefit of 100% D.A. neutralisation would result in their drawing lesser pension to the extent of Rs. 4368 as illustrated in case of Santipriya Roy on page 16-17 of the order of the Honourable Supreme Court. In face of such facts the observations by the Honourable Supreme Court on Page 35 of the order that it could possibly be said that for those who are with the Basic Pension in the region of Rs. 6000 on the basis of
tapering formula may well, in the ultimate analysis, average to the same level of 0.18% are erroneous as it fails to recognise the fact of merger of D.A. at 2288 points with Basic Pay in case of post November 2002 retirees and thus becoming eligible for computing D.A. and yielding higher quantum in absolute terms. In this backdrop the observations made in para 23 of the judgement are based on erroneous understanding of the methodology of calculating D.A. using tapered rates of neutralisation vis-a-vis calculating D.A. at 100% neutralisation for the entire amount of Basic Pension.
The observations by the court that neither the rate of 0.18% can be applied as it would cause great harm and damage to the retirees nor a flat rate of 0.24% can be applied for entire amount of Basic Pension falls short of any rationale or reasonableness. Their assumption that adopting a flat rate of 0.24% as prayed for the retirees who retired before 01.11.2002 will confer better rate than those employees who retired after 01.11.2002 undermines the fact of merger of D.A. at 2288 points for post November 2002 retirees. The merger of D.A. with Basic Pay would help them get higher quantum of Basic Pension resulting in higher amount of D.A. in absolute terms even at 0.18% neutralisation. Their further observations under para 24 that it would be extremely difficult and hazardous to adopt a flat rate as is sought to be projected defies logic and common sense as100% neutralisation at 0.18% is neither difficult nor hazardous then how 100% neutralisation at 0.24% could be termed as extremely difficult and hazardous. The Pension Scheme in the Bank did not become unworkable by changing the methodology of D.A. neutralisation from tapered slabs to 100% in case of those who retired post November 2002 then how it could be assumed that adopting the same methodology by changing the neutralisation of D.A. formula from tapered slab basis to 100% would make the scheme unworkable. A reference to the cases of P.N. Menon and others and Indian Ex-Service League and others under para 25 of order are irrelevant and out of context. When tapering formula was done away with by R.B.I. for all the retirees without any artificial classification based on cut off date and has been working smoothly and successfully, the apprehensions as mentioned in the order are unfounded.
As regards taking the settlement as a package deal in totality we are of the view that the settlement did not mention any cut off date to classify the retirees into pre and post November 2002. Hence the assumption of rejecting the settlement in part is arbitrary. The Honourable Court has shown a complete oblivion to the fact that IBA arbitrarily created this discriminatory classification by means of a separate letter dated 28.06.2005 and not through any settlement between the parties.
The alibi that a sum of Rs. 1288 crores per annum was agreed in the settlement towards all the benefits and any stepping up of benefit for a section of employees (100% D.A. neutralisation to pre 2002 retirees) is bound to inflate the figure is an untenable and weak argument as the order itself observes that this by itself was not a ground that weighed with them. It is abundantly clear that the amount of Rs. 1288 crores did not and can not include the cost of future
increase in D.A.
The observations of the Honourable Court that having confirmed the decision of the Division Bench of Madras High Court the matter stood closed (para 26) are inexplicable in as much as its earlier order confirming the decision of the Madras High Court stood open consequent to filing of review petitions by the aggrieved parties as mentioned in the earlier paragraph on page no. 2.
In view of the foregoing facts we have been consulting the constituents of UFBU, legal experts and senior advocates of Supreme Court so as to explore the further course of action which may include filing a review petition, filing a curative application while simultaneously pursuing the matter with UFBU, IBA and the Government for an amicable resolution of the problem. We will be constantly consulting the constituents of CBPRO regarding all future course of actions.
We will also try our best to coordinate with all Apex Bank Retirees Organisations to realise the aspirations and expectations of our Members. We seek cooperation of all concerned in this regard.
With comradely regards,
Yours Comradely,
A.Ramesh Babu K.V.Acharya
Joint Conveners
Unquote
Quote
Circular No. 011/2018 Dated: 01.06.2018
TO
THE GENERAL SECRETARIES
Constituents of C B P R O
Dear Comrades,Sub: Honourable Supreme Court Judgement regarding 100% DA Neutralisation.
We refer to our circular no. 010/2018 dated 16.05.2018 on the above subject wherein we gave the brief and operative part of the judgement delivered by the Honourable Supreme Court and assured our members that a detailed circular will be issued after studying and analysing the full judgement.
The Order of the Honourable Supreme Court has shocked the retirees in the banking industry who were hoping for a favourable judgement. We wish to reiterate that the hopes of our rank and file were not unfounded as the same were based on the principles of equity, fairness and reasonableness as provided under Article 14 of the Constitution of India. There were strong reasons to strengthen our hopes on 1st August 2018 after conclusion of arguments before the division bench. It is worth mentioning that after hearing the arguments both the judges had a brief interaction between them and then the bench made
the following observations to the senior counsels of all the parties to the case.
“This court has already dismissed the appeals of retirees against the orders of the High Court of Madras on similar issue and there cannot be two different and contradictory judgements by this court on the same matter. Therefore there are three options:
We recall the earlier order in case of Madras High Court appeal and then pass a fresh order in this case.
We refer this case to a larger bench for disposal.
The appellants in case of Madras High Court order file review petitions and we tag the same with this case after condoning the delay.”
These observations of the Honourable Supreme Court on 1st August 2018 gave enough indications about the directions in which the case was heading. The option 3 of the above was pursued and all the appellants in case of Madras High Court filed their review petitions which were tagged with the case of United Bank of India, the delay was condoned and arguments heard on 23rd August 2018. The Honourable Bench reserved the judgement after hearing the argument of
concerned parties. The judgement was pronounced in Court on 16.05.2018 by allowing the appeals of United Bank of India and others setting aside the judgements and orders of the Honourable Court of Calcutta in appeals and dismissing the writ petition no. 507 of 2012 preferred by respondents namely United Bank of India Retirees’ Welfare Association and others. We feel that the judgement of the Honourable Supreme Court suffers from the following inaccuracies
and inconsistencies:
The Honourable Court has analysed the issue of D.A. neutralisation as per tapered method at different rates vis-a-vis 100% neutralisation and made observations in paras 21 to 25. The analysis under para 21 is erroneous in as much as the issue was not that whatever benefi t was enjoyed by the employees who retired before November 2002 with tapered methodology of D.A. neutralisation was taken away, it was rather the improvement in D.A. neutralisation from tapered to 100% as allowed to those employees who retired after November 2002 was not extended to those who retired before November 2002. Since all the retirees constituted a homogenous group and were getting D.A. neutralisation under tapered methodology, creating an arbitrary classification by fixing 1.11.2002 as cut off date for extending the benefit of 100% neutralisation was not only discriminatory but also violative of the principle laid down by the Honourable Supreme Court in the case of D.S. Nakara.
The Division Bench relied on the judgement in case of Kallakkurichi Taluk Retired Officials Association, Tamil Nadu while observing that the dearness relief is relatable to the cost of living index and varies in direct proportion to the same. It must be borne in mind that dearness relief is an amount paid to the retirees to neutralize the astronomical rise in prices. The object of paying dearness relief is the same irrespective of the date on which the employee retires. Inflation hits the employees who retire before the cut off date as hard as it does those who retire later. Therefore dearness relief cannot be different to two sets of retirees. Holding the distinctions between the pre November 2002 retirees and post November 2002 retirees to be unreasonable, arbitrary and discriminatory. The Division Bench directed the Bank to pay dearness relief to all pensioners at the same rate. It is beyond comprehension as to how such a reasoned and
merited judgement could be set aside by disregarding the principles held in case of D.S. Nakara and Kallakkurichi Taluk Retired Officials Association, Tamil Nadu.
It was held in case of D.S Nakara that if the State considered it necessary to liberalise the pension scheme, we find no rationale principle behind it for granting these benefits only to those who retired subsequent to that date simultaneously denying the same to those who retired prior to that date. If the liberalisation was considered necessary for augmenting social security in old age to the government servants, then those who retired earlier cannot be worse off than those who
retired later. The artificial division has absolutely no nexus to the objects sought to be achieved by liberalising the pension scheme. It is thus clear that 100% D.A. neutralisation being a liberalisation and improvement with regard to calculation of D.A. to the retired employees cannot be denied to one set of retirees on the basis of any artificial and arbitrary classification by stipulating a cut off date. It was also observed that for the purpose of revised computation of D.A.
according to liberalised formula was to extend the benefit of improvement to all existing retirees irrespective of the date of their retirement as they constitute one class and any further division within that class being impermissible.
It was held in case of D.S. Nakara that there could be justification in making a distinction between two sets of retirees and limiting the new retiral benefit to those who retired after the cut off date. But in this case the change in the methodology of neutralisation of D.A. from tapered basis to 100% is an improvement and not a new retiral benefit. Hence an arbitrary and artificial classification based on a cut off date violates the principle held in case of Nakara.
The Honourable Supreme Court has shown an oblivion to the fact that the percentage of D.A. at 0.18% with 100% neutralisation for the present slabs of 1065 works out to 191.70% whereas if the percentage was to be calculated on the basis of tapered methodology for 0.18% upto Rs. 9650 plus 0.15% above Rs. 9650 and upto Rs. 15350 plus 0.09% above Rs. 15350 and upto Rs. 16350 plus 0.04% above Rs.16350, the D.A. percentage would be lower at 162.95%. The similar difference would arise in case of pre November 2002 retirees and hence their effective percentage of D.A. being lower under tapered method would hurt them
as they will be denied D.A. on that component of D.A. which is merged with Basic Pay with effect from 01.11.2002 (2288 points). The differential treatment to the pre November 2002 retirees by not extending the benefit of 100% D.A. neutralisation would result in their drawing lesser pension to the extent of Rs. 4368 as illustrated in case of Santipriya Roy on page 16-17 of the order of the Honourable Supreme Court. In face of such facts the observations by the Honourable Supreme Court on Page 35 of the order that it could possibly be said that for those who are with the Basic Pension in the region of Rs. 6000 on the basis of
tapering formula may well, in the ultimate analysis, average to the same level of 0.18% are erroneous as it fails to recognise the fact of merger of D.A. at 2288 points with Basic Pay in case of post November 2002 retirees and thus becoming eligible for computing D.A. and yielding higher quantum in absolute terms. In this backdrop the observations made in para 23 of the judgement are based on erroneous understanding of the methodology of calculating D.A. using tapered rates of neutralisation vis-a-vis calculating D.A. at 100% neutralisation for the entire amount of Basic Pension.
The observations by the court that neither the rate of 0.18% can be applied as it would cause great harm and damage to the retirees nor a flat rate of 0.24% can be applied for entire amount of Basic Pension falls short of any rationale or reasonableness. Their assumption that adopting a flat rate of 0.24% as prayed for the retirees who retired before 01.11.2002 will confer better rate than those employees who retired after 01.11.2002 undermines the fact of merger of D.A. at 2288 points for post November 2002 retirees. The merger of D.A. with Basic Pay would help them get higher quantum of Basic Pension resulting in higher amount of D.A. in absolute terms even at 0.18% neutralisation. Their further observations under para 24 that it would be extremely difficult and hazardous to adopt a flat rate as is sought to be projected defies logic and common sense as100% neutralisation at 0.18% is neither difficult nor hazardous then how 100% neutralisation at 0.24% could be termed as extremely difficult and hazardous. The Pension Scheme in the Bank did not become unworkable by changing the methodology of D.A. neutralisation from tapered slabs to 100% in case of those who retired post November 2002 then how it could be assumed that adopting the same methodology by changing the neutralisation of D.A. formula from tapered slab basis to 100% would make the scheme unworkable. A reference to the cases of P.N. Menon and others and Indian Ex-Service League and others under para 25 of order are irrelevant and out of context. When tapering formula was done away with by R.B.I. for all the retirees without any artificial classification based on cut off date and has been working smoothly and successfully, the apprehensions as mentioned in the order are unfounded.
As regards taking the settlement as a package deal in totality we are of the view that the settlement did not mention any cut off date to classify the retirees into pre and post November 2002. Hence the assumption of rejecting the settlement in part is arbitrary. The Honourable Court has shown a complete oblivion to the fact that IBA arbitrarily created this discriminatory classification by means of a separate letter dated 28.06.2005 and not through any settlement between the parties.
The alibi that a sum of Rs. 1288 crores per annum was agreed in the settlement towards all the benefits and any stepping up of benefit for a section of employees (100% D.A. neutralisation to pre 2002 retirees) is bound to inflate the figure is an untenable and weak argument as the order itself observes that this by itself was not a ground that weighed with them. It is abundantly clear that the amount of Rs. 1288 crores did not and can not include the cost of future
increase in D.A.
The observations of the Honourable Court that having confirmed the decision of the Division Bench of Madras High Court the matter stood closed (para 26) are inexplicable in as much as its earlier order confirming the decision of the Madras High Court stood open consequent to filing of review petitions by the aggrieved parties as mentioned in the earlier paragraph on page no. 2.
In view of the foregoing facts we have been consulting the constituents of UFBU, legal experts and senior advocates of Supreme Court so as to explore the further course of action which may include filing a review petition, filing a curative application while simultaneously pursuing the matter with UFBU, IBA and the Government for an amicable resolution of the problem. We will be constantly consulting the constituents of CBPRO regarding all future course of actions.
We will also try our best to coordinate with all Apex Bank Retirees Organisations to realise the aspirations and expectations of our Members. We seek cooperation of all concerned in this regard.
With comradely regards,
Yours Comradely,
A.Ramesh Babu K.V.Acharya
Joint Conveners
Unquote
Thursday, June 7, 2018
Meeting held with IBA on 5th June 2018, Common Charter of Demands petaining to Bank Pensioners
In the Meeting held with IBA on 5th June 2018, all the Workmen Unions and all the Officers Organisations submitted their Common Charter of Demands.
OFFICERS COD pertaining to Bank Pensioners is furnished here under:
PART IV
SUPERANNUATION BENEFITS:
The improvements made in the Pension scheme in the areas like updation and upgradation of the Pension, the rationalization of Dearness Allowance, Family Pension etc., needs to be implemented in the banking industry as our pension scheme amply speaks of being in the lines of central govt. pension scheme. The seventh Pay commission has analysed the issue as given below. Constitutional Provisions and Judicial Position Article 366(17) of the Constitution defines pension as: “Pension means a pension, whether contributory or not, of any kind whatsoever payable to or in respect of any person, and includes retired pay so payable, a gratuity so payable and any sum or sums so payable by way of the return, with or without interest thereon or any other addition thereto, of subscriptions to a Provident Fund.” Pension has been the subject matter of a number of landmark judgements by the Supreme Court of India in which its nature, obligations of the government thereon and the recognition of distinctiveness in categories of pensions and pensioners has been settled. In its judgment in D.S. Nakara and others Vs Union of India [AIR 1983 SC 130] the Supreme Court held that a pension scheme consistent with available resources must provide that a pensioner would be able to live free from want, with decency, independence and self respect and standard equivalent at pre-retirement level. It held that pension is not an ex-gratia payment but payment for past services rendered. At the same time in Indian Ex-Services League & Others Vs Union of India & Others [(1991) 2 SSC 104] the Supreme Court held that the decision in the Nakara case has to be read as one of a limited application and its ambit cannot be enlarged to cover all claims made by the pension retirees or a demand for an identical amount of pension to every retiree from the same rank irrespective of the date of retirement, even though the reckonable emoluments for computation of their pension be different. In the judgement in Vasant Gangaramsachandan Vs State of Maharashtra & Others [(1996) 10 SSC 148] Supreme Court reiterated that pension is not a bounty of the State. It is earned by the employee for service rendered to fall back upon after retirement. It is attached to the office and it cannot be arbitrarily denied. In the case of petitioners who were retired Railway employees, covered by or who opted for the Railway Contribution Fund Pension Scheme, the Supreme Court in Krishna Kumar Vs Union of India and Others [(1990) 4 SSC 207] averred that it was never held that both the pension retirees and PF retirees formed a homogenous class and that any further classification Report of the Seventh CPC 382 Index among them (viz., pension retirees and PF retirees) would be violative of Article 14. Under the Pension Scheme, the government's obligation does not begin until the employee retires but it begins on his/her retirement and then continues till the death of the employee. Thus, on the retirement of an employee, government's legal obligation under the PF account ends while under the Pension Scheme it begins. The rules governing the PF and its 49 contribution are entirely different from the rules governing pension. An imaginary definition of obligation to include all the government retirees in a class was not decided and could not form the basis for any classification for this case. th Analysis and Recommendations: The 7 Pay Commission sought the views of the government in this regard. The Department of Pension and Pensioners Welfare stated that the VI CPC had recommended calculation of Pension Report of the Seventh CPC recommended pension @ 50 percent of last pay or the average emoluments (for last 10 months) whichever is more beneficial. The Commission also recommended delinking of pension from qualifying service of 33 years. Effectively the dispensation on pension has already been liberalised by the VI CPC. Further the recommendations of this Commission in relation to pay of both the civilian and defence forces personnel will lead to a significant increase in the pay drawn and therefore in the 'last pay drawn'/'reckonable emoluments.' Therefore the Commission does not recommend any further increase in the rate of pension and family pension from the existing levels. Quantum of Minimum Pension should Equal the Minimum Wage. In representations/depositions before the Commission it has been stated that the existing minimum pension fixed at Rs.3,500 is low and it has been argued that minimum pension be fixed equal to minimum pay for sustenance. The Commission sought the views of the government in this regard. The Department of Pension and Pensioners Welfare stated that as per the orders issued after V CPC, the minimum pension in the government was Rs. 1,275. The normal revised consolidated pension of a pre-2006 pensioner is 2.26 of the prerevised basic pension. The revised minimum pension of Rs. 3,500 is much more than 2.26 time of the pre-revised pension of Rs. 1,275. Further the recommendations of this Commission in relation to pay of personnel will lead to a significant increase in the minimum pay from the existing Rs.7,000 per month to Rs.18,000 per month. This, based on the computation of pension, will raise minimum pension from the existing Rs.3,500 to Rs.9,000. The minimum pension based on the recommendations of this Commission will increase by 2.57 times over the existing level. In Civil APPEAL 1123 OF 2019 THE HONOURABLE Supreme Court has clearly stated that pension is not a bounty, it should be 50% of the pay and there can be no question of capacity to pay. Hence we demand revision in pension, family pension and the principle of one rank one pension. Please note that today many officers salary is less than the pension of their parents who are Central Govt Pensioners.
GENERAL: The voluntary retirement provided in the Officers Service Rules should be incorporated in the Pension rules and they should also be made eligible for Pension without any discrimination. Pension scheme should be extended to all those who have been denied earlier on the basis of the misinterpretation of the understandings reached with IBA in 50 particular those who retired under voluntary retirement scheme as per the service regulations / resigned after completing 20 years. (Full Pension Eligibility Period to be made 20 years.:: The full pension eligibility period in Central Government and RBI / NABARD are now revised to 20 years. However in Banks , full pension eligibility period continues to be 33 years. Hence the relevant clauses in Pension Regulations to be amended to make full pension eligibility period to be 20 years.) Pension should be revised for retirees in all Banks including SBI alongwith wage revision as done for retirees from central government. The officers who joined the bank between 01.11.1993 and 26.01.1996 have to be covered under the pension regulations. Provision of additional service as per the Pension Regulations to the extent of 5 years should be extended to each and every retirees in the banking industry. Those having relaxation of age at the time of recruitment on account of disability etc., also to be extended additional period of 5 years to his / her service qualifying for pension. Also, for Ex-servicemen their past services rendered in the Armed Force should be added to his / her service for qualifying for pension. (Counting of Military Service Period of Short Service Commissioned Officer joining the Bank : Short Service Commissioned Officer are not drawing any pension for their services rendered in Military. They are paid gratuity at the time of release from Military. Such Officers when they join Central Government and Organisations like RBI/ NABARD are given the option to remit the gratuity received by them to the Employer Bank / Organisation at the time of joining so that the period of service rendered in Military is counted towards eligibility of pension in Bank. However this provision is not available to Short Service Commissioned Officers joining Public Sector Banks. Hence we demand that Short Service Commissioned Officers joining PSB may be allowed to remit the gratuity received by them at the time of release from Military so that their period of service in Military is counted towards eligibility period for pension in PSBS. For existing Short Service Commissioned Officers who are already in the service of the PSBs, may be given a one time option to return the gratuity received at the time of release with simple interest @ 6 % from the date of receipt of gratuity till date payment to the Bank for availing inclusion of Military Service Period toward pension eligibility.)
FAMILY PENSION: The Family Pension should be on par with the Government and be at 30% of last drawn pay by the officer across the board to every one. The regular family pension will be payable till death. Up to the age of 67 years or 10 years after death full pension.
51 NEW PENSION SCHEME The employees and officers who joined the banking industry on or after th 01.04.2020 should be governed by the original pension settlement signed on 29 October 1993 and Gazetted in the year 1995. The seventh pay commission has recommended as below. Pension has been one of the key Terms of Reference (TORs) for successive Pay Commissions. While the VI CPC was the first Pay Commission to have been constituted after the introduction of the National Pension System (NPS) which came into effect on 01.01.2004, the VII CPC is the first one to be constituted after some experience has been gained on this count. Pension Related TOR of the Commission. The TOR of the present Commission - to examine the principles which should govern the structure of pension and other retirement benefits, keeping in view that retirement benefits of all Central Government employees appointed on and after 01.01.2004 are covered by the National Pension System (NPS)–limits the mandate of this Commission only to the Old Pension System (OPS). However, during its interaction with staff associations and other stakeholders, the Commission received many grievances/suggestions relating to both the OPS and the NPS. It has also been averred, inter alia, that NPS is proving to be an impediment in attracting and subsequently retaining the best talent for the Central Civil Services/All India Services (AIS). In this backdrop, the Commission decided to address the grievances related to NPS, which have been discussed in this chapter. Issues relating to OPS and other retirement benefits have been dealt in Chapter 10.1 and Chapter
10.2. NPS Background - The Commission notes that the NPS is the culmination of a series of social security and pension related reform initiatives in India. As in many other countries, pension reforms in India were driven by the fiscal constraints of supporting a public pension system and the longer-term problems of an ageing population. Government of India, in 1998, set up the Committee for Old Age Social and Income Security (OASIS). The OASIS committee concluded, among other things, that the Defined Benefit Scheme (DBS), serving the Central Government retirees, is unaffordable for government and it should be replaced by a Defined Contribution Scheme (DCS). The Commission notes that the total pension liability on account of Central Government employees had risen from 0.6 percent of GDP (at constant prices) in 1993-94 to 1.66 percent of GDP (at constant prices) in 2002-03. Pension expenditure of the Central Government grew at a compound annual growth rate (CAGR) of 21 percent during the period 1990 to 2001. This was also reflected in the increasing fiscal deficits. Further, in the DBS, pensions were wage indexed, and thus the outgo on this account would have increased manifold. The stressed fiscal situation, thus, set the stage for introduction of the NPS in India. The Bhattacharya Committee Report of the Seventh CPC 422 Index Report (HLE Group on NPS) (Feb 2002) recommended that an unfunded Defined Benefit (DB), Pay As You Go (PAYG) scheme or a pure Defined Contribution (DC) scheme would not be suitable and therefore recommended a hybrid DB/DC scheme to meet the requirements of central civil servants. 52 International Experience on Pension Reforms Pension reforms, in recent times, have been initiated in many countries across the world. The Commission notes that an aging population, changing social structures, uncertain and inadequate social security benefits and rising fiscal liabilities have been the major causes behind pension reforms, especially for a transition from DBS to DCS. Introduction of NPS On the basis of various reports, the Central Government made the decision to place all new recruits into Central Government from 01.01.2004 onwards (excluding Defence Forces) under NPS. NPS is managed by the Pension Fund Regulatory and Development Authority (PFRDA), which was initially set up as an interim authority. The PFRDA Act was passed by Parliament and notified w.e.f. 01.02.2019, bestowing statutory status on the authority. Under the NPS, employees contribute 10 percent of their monthly salary (basic plus DA) towards their pension with matching contribution from Central Government. In respect of the AIS officers working under them, the matching contribution is made by the State Governments. Three professional Pension Fund Managers invest the funds under NPS following an asset allocation framework mandated by government. The Central Record Keeping Agency (CRA) maintains a separate pension account for each individual employee identified by a unique Permanent Retirement Account Number (PRAN). Individual employees have been given online access through the CRA website to view the status of their pension wealth. Under the NPS, upon superannuation, the individual is required to invest at least 40 percent of pension wealth for purchase of annuity and the remaining up to 60 percent is paid to him as lump sum. The annuity provides for pension for the lifetime of the employee. Individual subscribers to the NPS are not covered under the General Provident Fund. Regulations issued by the PFRDA now provide for partial withdrawals up to 25 percent of the contribution made by the subscriber to his individual account after at least ten years from the date of joining, up to a maximum of three times during the tenure of the subscription for certain specified purposes, before superannuation. The regulations issued by PFRDA also provide that if the employee dies in service, then at least 80 percent of the accumulated pension wealth shall be mandatorily utilized for purchase of annuity and the balance amount would be paid to the nominee(s)/legal heirs. Report of the Seventh CPC 423 Index Performance of the NPS Over 13 lakh Central Government subscribers have accumulated pension wealth of over Rs.24,000 crore by the end of 2019-14. The Compound Annual Growth Rate (CAGR) of returns on the scheme are tabulated below:- (in percent) Year 2008- 09 2019- 10 2020- 11 2021- 12 2019- 13 2019- 14 2019- 15 CAGR (Central Govt.) The Commission further notes that all State Governments (with the exception of Tripura and West Bengal) have switched to NPS on the Central Government pattern. Grievances against the NPS- The NPS has now been in effect for over 10 years. During this period, there has been perceptible progress in putting together the architecture and providing information to subscribers. Major concerns, however, remain. Broadly, these are as under: i. The larger federations and staff 53 associations advocated scrapping the NPS on the ground that it discriminates between two sets of government employees. ii. Individuals covered under NPS have pleaded for reverting to the OPS on the grounds of uncertainty regarding the actual value of their future pension in the face of market related risks. iii. Individuals have pointed out that under NPS, the effective salary becomes less since the employee has to mandatorily contribute 10 percent of pay towards the pension fund. iv. Individuals have stated that grievance redressal facility is not effective and consultation with stakeholders has been non-existent. This communication gap has generated insecurity in the minds of stakeholders including staff and Group 'A' officers of Central Government as well as All India Service Officers. v. Associations have complained that Family Pension after the death of the employee is not ensured in the NPS. Moreover, if an employee dies at an early age, the family would suffer since annuity from the contribution would be grossly inadequate. vi. Individuals have complained that NPS subscribers have no recourse to GPF for their savings. Their personal savings (10% of salary) are considered part of a larger corpus. It has been pointed out that the right approach would be to consider only government's contribution and the returns earned on it as the effective amount available for purchase of annuities. vii. Associations have pointed out that unlike the facility under GPF, it is not possible to take refundable advances under NPS, even to meet obligatory social expenditure. This forces employees towards increased indebtedness as they have to borrow from elsewhere. viii. Grievances also relate to tax treatment under NPS. While contributions and accumulations in NPS are exempt, lump sum withdrawals from NPS at any time are taxable at par with any other income. In addition, there is a service tax liability on any amount utilised for purchase of annuity. It has been pointed out that though NPS became effective from 2004, detailed instructions were issued only in late 2009 and in many cases the credit of contributions began from 2012. In the case of AIS officers in some States, contributions by the concerned State Government are yet to be fully made and deployed. The net result of this has been that contributions for the period 2004-2012 have not been made in full or have earned simple interest and did not get any market linked returns. Because of the prevailing confusion, contributions made by some AIS officer have been returned to them without interest. This will have a huge impact on the eventual corpus as the benefits of compounding were not available for the first 8 -9 years. x. Individuals, in their presentation before the Commission, stated that annuities under NPS have no compensation for inflation unlike dearness relief under OPS. Further, in the case of OPS there is a revision in basic pension itself after every Pay Commission. This too is not available in respect of annuity of NPS subscribers. xi. It has been pointed out that government employees are not given freedom of choice in choosing their fund manager based on performance and track record as the contributions are divided in a pre-specified ratio among selected Pension Fund Managers. It has been stated that government employees have no say in asset allocation of their money. xii. Concerns were raised that the contribution of 10% + 10% will not be sufficient to create a corpus which provides reasonable assurance that pension will be 50 percent of the last pay drawn. 54 Analysis of the Issues by the Commission - The Commission has examined these concerns raised by the stakeholders. The Commission also interacted with Chairman, PFRDA, and representatives of the Department of Pensions and Pensioners Welfare (DPPW), Department of Personnel and Training (DoPT), Department of Expenditure (DoE) and the Department of Financial Services (DFS). In so far as the future value of pension under NPS is concerned, the Commission notes that this would depend upon a combination of factors: (i) performance of the invested fund, which in turn would depend on the asset mix of the investment and general economic situation of the country, (ii) cost of financial intermediation, (iii) contribution rates, (iv) period of contribution, (v) performance of the fund manager and (vi) development of the annuity market. Analysis of the Asset Mix of Investments - On asset mix of the investment, the pension funds, the world over, are invested in different assets including government and corporate bonds, equities, foreign securities etc. government bonds are generally the lowest risk and lowest yield. Corporate bonds and equities are higher risk and higher yield. Typically, systems use a mix of at least two types of assets– Government Bonds and Corporate Bonds/Equities. As per the investment guidelines stipulated by the government for Central Government employees under NPS, up to 55 percent can be invested in government bonds, up to 40 percent in corporate debt securities, up to 15 percent in equities and up to 5 percent in money market instruments. International experiences on asset mix vary across countries which have adopted the DCS. The Commission notes that an innovative approach to investment under the DCS is the Life Cycle Approach. Under this, the asset mix of each individual changes based on his/her age. The underlying assumption under this approach is that younger workers are better able to absorb year on year volatility and therefore can undertake risk while older workers should reduce risk as they approach retirement. A carefully selected asset mix is the sine qua non to higher returns. The Commission recommends that the investment choices under NPS be calibrated on a life cycle approach and the choices be offered in a simple manner so that any lay person can understand and act accordingly. The Commission also recommends that government, in consultation with PFRDA, come up with different options for investment mix and provide subscribers a range of options. Contribution Rates - In DCS, typically, the employees as well as the employers contribute towards a pension fund. As discussed earlier, the quantum of pension payouts would also depend upon the contribution rates. Higher the contribution rate, better would be the pension payouts. The contribution rates for both the employees and the employers vary across the globe. The Commission has received suggestions that the government's contribution should be enhanced from the present 10 percent in aid of a higher payout under the NPS. Associations and individuals have made presentations before the Commission highlighting that forecasts suggest that a 10 percent contribution from government will not be adequate to provide reasonable post retirement financial security in all cases. The 55 Commission, therefore, recommends that this important aspect should be reexamined in detail by an expert body for making course corrections if required. Period of Contribution - The Commission notes that time is of the essence in building up a reasonable corpus and ensuring that effects of compounding are significant. It is therefore essential that contributions by individuals and corresponding contributions by government are made in time, and more importantly, are deployed without any loss of time. Any delays in this respect, particularly in the initial years can have a large impact on the eventual corpus. 2004-2021 Entrants 10.3.20 Government employees who have joined service between 2004 and 2021 have suffered due to delay in finalizing the structure of the NPS and the issue of detailed instructions. Although they have made regular contributions, in many cases, this money and/or counterpart contributions were not deployed in the market. In the case of AIS officers, some states are yet to release counterpart contributions or pay interest on delayed contributions. This has led to a situation where the accumulated corpus even after 11 years of service could be meagre. It is necessary that this situation which arose during the transition from OPS to NPS be addressed. The Commission therefore recommends that Central Governments and State Governments should, in a time bound manner, ensure that all the due contribution along with compounded interest, where contributions have been delayed, be deposited in the accounts of the beneficiaries. Advisories should be issued to the State Governments to deposit amounts, if not already done, in respect of NPS beneficiaries belonging to All India Services. Many Association have pointed out that unlike the facility under GPF, it is not possible to make withdrawals under NPS, even to meet obligatory social expenditure. This forces employees towards increased indebtedness as they have to borrow from elsewhere. The Commission notes that under the NPS Tier-I account, a subscriber is permitted to make partial withdrawal of twenty five percent of the contributions made to his/her individual pension account for certain specified purposes. Such withdrawals are permitted a maximum of three times during the entire tenure of subscription and a period of at least five years should have elapsed between two such withdrawals. The Commission further notes that there exists a voluntary Tier-II account. Under this account, a subscriber can, at any time, withdraw the accumulated wealth either in full or part and there is no limit on such withdrawals provided the account has sufficient balance of accumulated pension wealth to cover the amount being withdrawn. However, the Tier-II account is yet to be made operational. The Commission therefore recommends that PFRDA should take steps to make the Tier-II accounts operational as early as possible to enable the NPS subscribers the facility of withdrawals from their accounts in case of requirement. 56 Transparency under NPS- Many associations and individuals have complained that the information relating to the NPS is inadequate, resulting in high degree of uncertainty in the minds of contributors about post-retirement benefits. The Commission noted that PFRDA sends a communication to every participant each month with the current pension wealth and the latest contribution that has been credited. The Commission recommends that focused efforts be made to capture email addresses and mobile numbers of subscribers so that seamless communication is ensured for all subscribers. The Commission recommends that consultation with stakeholders should also be held periodically in different parts of the country. The Commission notes that no department of Government of India is taking ownership of the NPS. The Commission recommends that a Committee consisting of Secretary, Department of Financial Services, Secretary, Department of Pensions and Pensioners Welfare and Secretary, Department of Administrative Reforms and Public Grievances may be constituted to review the progress of implementation of NPS. The Commission also recommends that steps should be taken for establishment of an Ombudsman for redressing individual grievances relating to NPS. Tax Treatment under the NPS - NPS is under the Exempt–Exempt - Tax (EET) regime while the General Provident Fund under the OPS is under Exempt–Exempt–Exempt (EEE) dispensation. Under the NPS, while the contributions and the accumulations are tax-exempt, withdrawals are taxable. As such, this is an inferior tax treatment when compared to other pension programmes such as General Provident Fund, Contributory Provident Fund, Employees Provident Fund and Public Provident Fund wherein contributions, accumulations and withdrawals are tax-exempt. The Commission feels that tax neutrality should be ensured across various avenues for long term savings for post retirement incomes so that the employees covered by NPS are not at a disadvantage. The Commission therefore recommends that withdrawals under the NPS should be tax-exempt to place NPS at par with other pension schemes. The Commission also recommends that the service tax levied at the time of annuity purchase by NPS subscribers should be exempted. Issue of Family Pension In Case Of Death of the Subscriber Another complaint received by the Commission from staff associations and individuals is that Family Pension after the death of the employee is not ensured in the NPS. The Commission notes that the government had provisionally extended benefits under the Central Civil Service (Extraordinary Pension) Rules, Family Pension/Extraordinary Family Pension/Liberalised Pensionary Award to government servants appointed on or after 01.01.2004. Rules regulating these benefits have now been notified by the PFRDA. PFRDA regulations provide for an exit option from NPS in case of premature death of the subscriber by availing of additional relief from government, in which case the entire accumulated pension wealth inclusive of subscriber's contribution would be transferred to government. The Commission recommends notification of a scheme by government for provision of additional relief in such cases consequent to exit from NPS. 57 Framing of Rules and Regulations - The Commission notes that rules and regulating relating to NPS are being framed and notified by PFRDA from time to time. Associations and individual officers have raised the issue of the need for greater involvement of stakeholders in finalizing these regulations The Commission recommends that government encourage the PFRDA to set up a strong consultative mechanism involving the DPPW, DoPT, DFS and some associations of employees for a review of regulations and for finalizing future regulations to bring clarity and remove uncertainty relating to NPS. The Commission also recommends that draft regulations should be widely publicized to enable subscribers to respond to any proposed changes, as normally done by other regulatory authorities. So there is a need to go back to the old scheme or convert NPS into an assured pension scheme. If the pension contribution is Rs1000 per month for 20 years the accumulated interest and Principal at 12% will be Rs1000000 and the Bank will be able to pay Rs10000 per month as Pension at 12% Interest. In fact banks had a Perenial Pension Plan in which this was provided. When most of the loan schemes fetch more than 12% this is very much feasible. Each Bank can maintain the fund themselves and lend it for loans with Interest rate of 12% or above and will be able to pay an assured pension. Instead of allowing the funds to be invested in markets, Banks should be allowed to manage them and the Banks should pay 50% of the last drawn pay as pension. This is very much feasible.
GRATUITY: The Gratuity should be paid at the rate of one month salary and allowances without any ceiling. The gratuity should be completely exempt from payment of income tax. The calculation of gratuity should be changed as we move over to 5 day week. There is an anomaly between SBI and other Banks. Even within SBI Group, the associate Banks are covered under the service gratuity whereas SBI is covered under Act gratuity. We demand that all officers and employees be covered under the service Gratuity.
PROVIDENT FUND: Based on the principles of retirement benefits which allot Provident Fund, Gratuity and Pension for different purposes, the Provident Fund should be at the rate of 12% of the total salary and allowances. The Provident Fund should be payable to all employees. ENCASHMENT OF LEAVE: Encashment of entire leave at credit should also be permitted on resignation, removal and compulsory retirement. Now, half permitted on resignation & full on compulsory retirement. The existing ceiling on encashment of leave should be removed at the time of resignation / superannuation as directed by the Court judgement. The entire 58 amount should be exempted from income tax as in the case of the Central Government Employees. Encashment of PL should be allowed without any ceiling.
MEDICAL BENEFIT SCHEME: A comprehensive Medical Scheme for pensioners/ retirees should be framed and introduced in all the banks as available now in the case of executive directors and CMDs of the Banks, and the medical insurance scheme is to be reversed.
WELFARE ACTIVITIES: A separate allocation of funds for improvements to welfare of the pensioners should be made every year. The facilities like Holiday Home, clinics, Transit House etc., should be made eligible for pensioners also. Present ceiling of 3 % of net profit to be given to welfare activities should be raised to 5 % of operating profit to be given to welfare activities. Suitable life cover should be taken for normal as well as accidental death of employees.
LFC/ HTC FACILITY: LFC / HTC Facility should be extended to the retirees also at par with serving employees or at least once in 5 years.
NEWS PAPER: News paper and fitness allowance can be provided to the pensioners.
OFFICERS COD pertaining to Bank Pensioners is furnished here under:
PART IV
SUPERANNUATION BENEFITS:
The improvements made in the Pension scheme in the areas like updation and upgradation of the Pension, the rationalization of Dearness Allowance, Family Pension etc., needs to be implemented in the banking industry as our pension scheme amply speaks of being in the lines of central govt. pension scheme. The seventh Pay commission has analysed the issue as given below. Constitutional Provisions and Judicial Position Article 366(17) of the Constitution defines pension as: “Pension means a pension, whether contributory or not, of any kind whatsoever payable to or in respect of any person, and includes retired pay so payable, a gratuity so payable and any sum or sums so payable by way of the return, with or without interest thereon or any other addition thereto, of subscriptions to a Provident Fund.” Pension has been the subject matter of a number of landmark judgements by the Supreme Court of India in which its nature, obligations of the government thereon and the recognition of distinctiveness in categories of pensions and pensioners has been settled. In its judgment in D.S. Nakara and others Vs Union of India [AIR 1983 SC 130] the Supreme Court held that a pension scheme consistent with available resources must provide that a pensioner would be able to live free from want, with decency, independence and self respect and standard equivalent at pre-retirement level. It held that pension is not an ex-gratia payment but payment for past services rendered. At the same time in Indian Ex-Services League & Others Vs Union of India & Others [(1991) 2 SSC 104] the Supreme Court held that the decision in the Nakara case has to be read as one of a limited application and its ambit cannot be enlarged to cover all claims made by the pension retirees or a demand for an identical amount of pension to every retiree from the same rank irrespective of the date of retirement, even though the reckonable emoluments for computation of their pension be different. In the judgement in Vasant Gangaramsachandan Vs State of Maharashtra & Others [(1996) 10 SSC 148] Supreme Court reiterated that pension is not a bounty of the State. It is earned by the employee for service rendered to fall back upon after retirement. It is attached to the office and it cannot be arbitrarily denied. In the case of petitioners who were retired Railway employees, covered by or who opted for the Railway Contribution Fund Pension Scheme, the Supreme Court in Krishna Kumar Vs Union of India and Others [(1990) 4 SSC 207] averred that it was never held that both the pension retirees and PF retirees formed a homogenous class and that any further classification Report of the Seventh CPC 382 Index among them (viz., pension retirees and PF retirees) would be violative of Article 14. Under the Pension Scheme, the government's obligation does not begin until the employee retires but it begins on his/her retirement and then continues till the death of the employee. Thus, on the retirement of an employee, government's legal obligation under the PF account ends while under the Pension Scheme it begins. The rules governing the PF and its 49 contribution are entirely different from the rules governing pension. An imaginary definition of obligation to include all the government retirees in a class was not decided and could not form the basis for any classification for this case. th Analysis and Recommendations: The 7 Pay Commission sought the views of the government in this regard. The Department of Pension and Pensioners Welfare stated that the VI CPC had recommended calculation of Pension Report of the Seventh CPC recommended pension @ 50 percent of last pay or the average emoluments (for last 10 months) whichever is more beneficial. The Commission also recommended delinking of pension from qualifying service of 33 years. Effectively the dispensation on pension has already been liberalised by the VI CPC. Further the recommendations of this Commission in relation to pay of both the civilian and defence forces personnel will lead to a significant increase in the pay drawn and therefore in the 'last pay drawn'/'reckonable emoluments.' Therefore the Commission does not recommend any further increase in the rate of pension and family pension from the existing levels. Quantum of Minimum Pension should Equal the Minimum Wage. In representations/depositions before the Commission it has been stated that the existing minimum pension fixed at Rs.3,500 is low and it has been argued that minimum pension be fixed equal to minimum pay for sustenance. The Commission sought the views of the government in this regard. The Department of Pension and Pensioners Welfare stated that as per the orders issued after V CPC, the minimum pension in the government was Rs. 1,275. The normal revised consolidated pension of a pre-2006 pensioner is 2.26 of the prerevised basic pension. The revised minimum pension of Rs. 3,500 is much more than 2.26 time of the pre-revised pension of Rs. 1,275. Further the recommendations of this Commission in relation to pay of personnel will lead to a significant increase in the minimum pay from the existing Rs.7,000 per month to Rs.18,000 per month. This, based on the computation of pension, will raise minimum pension from the existing Rs.3,500 to Rs.9,000. The minimum pension based on the recommendations of this Commission will increase by 2.57 times over the existing level. In Civil APPEAL 1123 OF 2019 THE HONOURABLE Supreme Court has clearly stated that pension is not a bounty, it should be 50% of the pay and there can be no question of capacity to pay. Hence we demand revision in pension, family pension and the principle of one rank one pension. Please note that today many officers salary is less than the pension of their parents who are Central Govt Pensioners.
GENERAL: The voluntary retirement provided in the Officers Service Rules should be incorporated in the Pension rules and they should also be made eligible for Pension without any discrimination. Pension scheme should be extended to all those who have been denied earlier on the basis of the misinterpretation of the understandings reached with IBA in 50 particular those who retired under voluntary retirement scheme as per the service regulations / resigned after completing 20 years. (Full Pension Eligibility Period to be made 20 years.:: The full pension eligibility period in Central Government and RBI / NABARD are now revised to 20 years. However in Banks , full pension eligibility period continues to be 33 years. Hence the relevant clauses in Pension Regulations to be amended to make full pension eligibility period to be 20 years.) Pension should be revised for retirees in all Banks including SBI alongwith wage revision as done for retirees from central government. The officers who joined the bank between 01.11.1993 and 26.01.1996 have to be covered under the pension regulations. Provision of additional service as per the Pension Regulations to the extent of 5 years should be extended to each and every retirees in the banking industry. Those having relaxation of age at the time of recruitment on account of disability etc., also to be extended additional period of 5 years to his / her service qualifying for pension. Also, for Ex-servicemen their past services rendered in the Armed Force should be added to his / her service for qualifying for pension. (Counting of Military Service Period of Short Service Commissioned Officer joining the Bank : Short Service Commissioned Officer are not drawing any pension for their services rendered in Military. They are paid gratuity at the time of release from Military. Such Officers when they join Central Government and Organisations like RBI/ NABARD are given the option to remit the gratuity received by them to the Employer Bank / Organisation at the time of joining so that the period of service rendered in Military is counted towards eligibility of pension in Bank. However this provision is not available to Short Service Commissioned Officers joining Public Sector Banks. Hence we demand that Short Service Commissioned Officers joining PSB may be allowed to remit the gratuity received by them at the time of release from Military so that their period of service in Military is counted towards eligibility period for pension in PSBS. For existing Short Service Commissioned Officers who are already in the service of the PSBs, may be given a one time option to return the gratuity received at the time of release with simple interest @ 6 % from the date of receipt of gratuity till date payment to the Bank for availing inclusion of Military Service Period toward pension eligibility.)
FAMILY PENSION: The Family Pension should be on par with the Government and be at 30% of last drawn pay by the officer across the board to every one. The regular family pension will be payable till death. Up to the age of 67 years or 10 years after death full pension.
51 NEW PENSION SCHEME The employees and officers who joined the banking industry on or after th 01.04.2020 should be governed by the original pension settlement signed on 29 October 1993 and Gazetted in the year 1995. The seventh pay commission has recommended as below. Pension has been one of the key Terms of Reference (TORs) for successive Pay Commissions. While the VI CPC was the first Pay Commission to have been constituted after the introduction of the National Pension System (NPS) which came into effect on 01.01.2004, the VII CPC is the first one to be constituted after some experience has been gained on this count. Pension Related TOR of the Commission. The TOR of the present Commission - to examine the principles which should govern the structure of pension and other retirement benefits, keeping in view that retirement benefits of all Central Government employees appointed on and after 01.01.2004 are covered by the National Pension System (NPS)–limits the mandate of this Commission only to the Old Pension System (OPS). However, during its interaction with staff associations and other stakeholders, the Commission received many grievances/suggestions relating to both the OPS and the NPS. It has also been averred, inter alia, that NPS is proving to be an impediment in attracting and subsequently retaining the best talent for the Central Civil Services/All India Services (AIS). In this backdrop, the Commission decided to address the grievances related to NPS, which have been discussed in this chapter. Issues relating to OPS and other retirement benefits have been dealt in Chapter 10.1 and Chapter
10.2. NPS Background - The Commission notes that the NPS is the culmination of a series of social security and pension related reform initiatives in India. As in many other countries, pension reforms in India were driven by the fiscal constraints of supporting a public pension system and the longer-term problems of an ageing population. Government of India, in 1998, set up the Committee for Old Age Social and Income Security (OASIS). The OASIS committee concluded, among other things, that the Defined Benefit Scheme (DBS), serving the Central Government retirees, is unaffordable for government and it should be replaced by a Defined Contribution Scheme (DCS). The Commission notes that the total pension liability on account of Central Government employees had risen from 0.6 percent of GDP (at constant prices) in 1993-94 to 1.66 percent of GDP (at constant prices) in 2002-03. Pension expenditure of the Central Government grew at a compound annual growth rate (CAGR) of 21 percent during the period 1990 to 2001. This was also reflected in the increasing fiscal deficits. Further, in the DBS, pensions were wage indexed, and thus the outgo on this account would have increased manifold. The stressed fiscal situation, thus, set the stage for introduction of the NPS in India. The Bhattacharya Committee Report of the Seventh CPC 422 Index Report (HLE Group on NPS) (Feb 2002) recommended that an unfunded Defined Benefit (DB), Pay As You Go (PAYG) scheme or a pure Defined Contribution (DC) scheme would not be suitable and therefore recommended a hybrid DB/DC scheme to meet the requirements of central civil servants. 52 International Experience on Pension Reforms Pension reforms, in recent times, have been initiated in many countries across the world. The Commission notes that an aging population, changing social structures, uncertain and inadequate social security benefits and rising fiscal liabilities have been the major causes behind pension reforms, especially for a transition from DBS to DCS. Introduction of NPS On the basis of various reports, the Central Government made the decision to place all new recruits into Central Government from 01.01.2004 onwards (excluding Defence Forces) under NPS. NPS is managed by the Pension Fund Regulatory and Development Authority (PFRDA), which was initially set up as an interim authority. The PFRDA Act was passed by Parliament and notified w.e.f. 01.02.2019, bestowing statutory status on the authority. Under the NPS, employees contribute 10 percent of their monthly salary (basic plus DA) towards their pension with matching contribution from Central Government. In respect of the AIS officers working under them, the matching contribution is made by the State Governments. Three professional Pension Fund Managers invest the funds under NPS following an asset allocation framework mandated by government. The Central Record Keeping Agency (CRA) maintains a separate pension account for each individual employee identified by a unique Permanent Retirement Account Number (PRAN). Individual employees have been given online access through the CRA website to view the status of their pension wealth. Under the NPS, upon superannuation, the individual is required to invest at least 40 percent of pension wealth for purchase of annuity and the remaining up to 60 percent is paid to him as lump sum. The annuity provides for pension for the lifetime of the employee. Individual subscribers to the NPS are not covered under the General Provident Fund. Regulations issued by the PFRDA now provide for partial withdrawals up to 25 percent of the contribution made by the subscriber to his individual account after at least ten years from the date of joining, up to a maximum of three times during the tenure of the subscription for certain specified purposes, before superannuation. The regulations issued by PFRDA also provide that if the employee dies in service, then at least 80 percent of the accumulated pension wealth shall be mandatorily utilized for purchase of annuity and the balance amount would be paid to the nominee(s)/legal heirs. Report of the Seventh CPC 423 Index Performance of the NPS Over 13 lakh Central Government subscribers have accumulated pension wealth of over Rs.24,000 crore by the end of 2019-14. The Compound Annual Growth Rate (CAGR) of returns on the scheme are tabulated below:- (in percent) Year 2008- 09 2019- 10 2020- 11 2021- 12 2019- 13 2019- 14 2019- 15 CAGR (Central Govt.) The Commission further notes that all State Governments (with the exception of Tripura and West Bengal) have switched to NPS on the Central Government pattern. Grievances against the NPS- The NPS has now been in effect for over 10 years. During this period, there has been perceptible progress in putting together the architecture and providing information to subscribers. Major concerns, however, remain. Broadly, these are as under: i. The larger federations and staff 53 associations advocated scrapping the NPS on the ground that it discriminates between two sets of government employees. ii. Individuals covered under NPS have pleaded for reverting to the OPS on the grounds of uncertainty regarding the actual value of their future pension in the face of market related risks. iii. Individuals have pointed out that under NPS, the effective salary becomes less since the employee has to mandatorily contribute 10 percent of pay towards the pension fund. iv. Individuals have stated that grievance redressal facility is not effective and consultation with stakeholders has been non-existent. This communication gap has generated insecurity in the minds of stakeholders including staff and Group 'A' officers of Central Government as well as All India Service Officers. v. Associations have complained that Family Pension after the death of the employee is not ensured in the NPS. Moreover, if an employee dies at an early age, the family would suffer since annuity from the contribution would be grossly inadequate. vi. Individuals have complained that NPS subscribers have no recourse to GPF for their savings. Their personal savings (10% of salary) are considered part of a larger corpus. It has been pointed out that the right approach would be to consider only government's contribution and the returns earned on it as the effective amount available for purchase of annuities. vii. Associations have pointed out that unlike the facility under GPF, it is not possible to take refundable advances under NPS, even to meet obligatory social expenditure. This forces employees towards increased indebtedness as they have to borrow from elsewhere. viii. Grievances also relate to tax treatment under NPS. While contributions and accumulations in NPS are exempt, lump sum withdrawals from NPS at any time are taxable at par with any other income. In addition, there is a service tax liability on any amount utilised for purchase of annuity. It has been pointed out that though NPS became effective from 2004, detailed instructions were issued only in late 2009 and in many cases the credit of contributions began from 2012. In the case of AIS officers in some States, contributions by the concerned State Government are yet to be fully made and deployed. The net result of this has been that contributions for the period 2004-2012 have not been made in full or have earned simple interest and did not get any market linked returns. Because of the prevailing confusion, contributions made by some AIS officer have been returned to them without interest. This will have a huge impact on the eventual corpus as the benefits of compounding were not available for the first 8 -9 years. x. Individuals, in their presentation before the Commission, stated that annuities under NPS have no compensation for inflation unlike dearness relief under OPS. Further, in the case of OPS there is a revision in basic pension itself after every Pay Commission. This too is not available in respect of annuity of NPS subscribers. xi. It has been pointed out that government employees are not given freedom of choice in choosing their fund manager based on performance and track record as the contributions are divided in a pre-specified ratio among selected Pension Fund Managers. It has been stated that government employees have no say in asset allocation of their money. xii. Concerns were raised that the contribution of 10% + 10% will not be sufficient to create a corpus which provides reasonable assurance that pension will be 50 percent of the last pay drawn. 54 Analysis of the Issues by the Commission - The Commission has examined these concerns raised by the stakeholders. The Commission also interacted with Chairman, PFRDA, and representatives of the Department of Pensions and Pensioners Welfare (DPPW), Department of Personnel and Training (DoPT), Department of Expenditure (DoE) and the Department of Financial Services (DFS). In so far as the future value of pension under NPS is concerned, the Commission notes that this would depend upon a combination of factors: (i) performance of the invested fund, which in turn would depend on the asset mix of the investment and general economic situation of the country, (ii) cost of financial intermediation, (iii) contribution rates, (iv) period of contribution, (v) performance of the fund manager and (vi) development of the annuity market. Analysis of the Asset Mix of Investments - On asset mix of the investment, the pension funds, the world over, are invested in different assets including government and corporate bonds, equities, foreign securities etc. government bonds are generally the lowest risk and lowest yield. Corporate bonds and equities are higher risk and higher yield. Typically, systems use a mix of at least two types of assets– Government Bonds and Corporate Bonds/Equities. As per the investment guidelines stipulated by the government for Central Government employees under NPS, up to 55 percent can be invested in government bonds, up to 40 percent in corporate debt securities, up to 15 percent in equities and up to 5 percent in money market instruments. International experiences on asset mix vary across countries which have adopted the DCS. The Commission notes that an innovative approach to investment under the DCS is the Life Cycle Approach. Under this, the asset mix of each individual changes based on his/her age. The underlying assumption under this approach is that younger workers are better able to absorb year on year volatility and therefore can undertake risk while older workers should reduce risk as they approach retirement. A carefully selected asset mix is the sine qua non to higher returns. The Commission recommends that the investment choices under NPS be calibrated on a life cycle approach and the choices be offered in a simple manner so that any lay person can understand and act accordingly. The Commission also recommends that government, in consultation with PFRDA, come up with different options for investment mix and provide subscribers a range of options. Contribution Rates - In DCS, typically, the employees as well as the employers contribute towards a pension fund. As discussed earlier, the quantum of pension payouts would also depend upon the contribution rates. Higher the contribution rate, better would be the pension payouts. The contribution rates for both the employees and the employers vary across the globe. The Commission has received suggestions that the government's contribution should be enhanced from the present 10 percent in aid of a higher payout under the NPS. Associations and individuals have made presentations before the Commission highlighting that forecasts suggest that a 10 percent contribution from government will not be adequate to provide reasonable post retirement financial security in all cases. The 55 Commission, therefore, recommends that this important aspect should be reexamined in detail by an expert body for making course corrections if required. Period of Contribution - The Commission notes that time is of the essence in building up a reasonable corpus and ensuring that effects of compounding are significant. It is therefore essential that contributions by individuals and corresponding contributions by government are made in time, and more importantly, are deployed without any loss of time. Any delays in this respect, particularly in the initial years can have a large impact on the eventual corpus. 2004-2021 Entrants 10.3.20 Government employees who have joined service between 2004 and 2021 have suffered due to delay in finalizing the structure of the NPS and the issue of detailed instructions. Although they have made regular contributions, in many cases, this money and/or counterpart contributions were not deployed in the market. In the case of AIS officers, some states are yet to release counterpart contributions or pay interest on delayed contributions. This has led to a situation where the accumulated corpus even after 11 years of service could be meagre. It is necessary that this situation which arose during the transition from OPS to NPS be addressed. The Commission therefore recommends that Central Governments and State Governments should, in a time bound manner, ensure that all the due contribution along with compounded interest, where contributions have been delayed, be deposited in the accounts of the beneficiaries. Advisories should be issued to the State Governments to deposit amounts, if not already done, in respect of NPS beneficiaries belonging to All India Services. Many Association have pointed out that unlike the facility under GPF, it is not possible to make withdrawals under NPS, even to meet obligatory social expenditure. This forces employees towards increased indebtedness as they have to borrow from elsewhere. The Commission notes that under the NPS Tier-I account, a subscriber is permitted to make partial withdrawal of twenty five percent of the contributions made to his/her individual pension account for certain specified purposes. Such withdrawals are permitted a maximum of three times during the entire tenure of subscription and a period of at least five years should have elapsed between two such withdrawals. The Commission further notes that there exists a voluntary Tier-II account. Under this account, a subscriber can, at any time, withdraw the accumulated wealth either in full or part and there is no limit on such withdrawals provided the account has sufficient balance of accumulated pension wealth to cover the amount being withdrawn. However, the Tier-II account is yet to be made operational. The Commission therefore recommends that PFRDA should take steps to make the Tier-II accounts operational as early as possible to enable the NPS subscribers the facility of withdrawals from their accounts in case of requirement. 56 Transparency under NPS- Many associations and individuals have complained that the information relating to the NPS is inadequate, resulting in high degree of uncertainty in the minds of contributors about post-retirement benefits. The Commission noted that PFRDA sends a communication to every participant each month with the current pension wealth and the latest contribution that has been credited. The Commission recommends that focused efforts be made to capture email addresses and mobile numbers of subscribers so that seamless communication is ensured for all subscribers. The Commission recommends that consultation with stakeholders should also be held periodically in different parts of the country. The Commission notes that no department of Government of India is taking ownership of the NPS. The Commission recommends that a Committee consisting of Secretary, Department of Financial Services, Secretary, Department of Pensions and Pensioners Welfare and Secretary, Department of Administrative Reforms and Public Grievances may be constituted to review the progress of implementation of NPS. The Commission also recommends that steps should be taken for establishment of an Ombudsman for redressing individual grievances relating to NPS. Tax Treatment under the NPS - NPS is under the Exempt–Exempt - Tax (EET) regime while the General Provident Fund under the OPS is under Exempt–Exempt–Exempt (EEE) dispensation. Under the NPS, while the contributions and the accumulations are tax-exempt, withdrawals are taxable. As such, this is an inferior tax treatment when compared to other pension programmes such as General Provident Fund, Contributory Provident Fund, Employees Provident Fund and Public Provident Fund wherein contributions, accumulations and withdrawals are tax-exempt. The Commission feels that tax neutrality should be ensured across various avenues for long term savings for post retirement incomes so that the employees covered by NPS are not at a disadvantage. The Commission therefore recommends that withdrawals under the NPS should be tax-exempt to place NPS at par with other pension schemes. The Commission also recommends that the service tax levied at the time of annuity purchase by NPS subscribers should be exempted. Issue of Family Pension In Case Of Death of the Subscriber Another complaint received by the Commission from staff associations and individuals is that Family Pension after the death of the employee is not ensured in the NPS. The Commission notes that the government had provisionally extended benefits under the Central Civil Service (Extraordinary Pension) Rules, Family Pension/Extraordinary Family Pension/Liberalised Pensionary Award to government servants appointed on or after 01.01.2004. Rules regulating these benefits have now been notified by the PFRDA. PFRDA regulations provide for an exit option from NPS in case of premature death of the subscriber by availing of additional relief from government, in which case the entire accumulated pension wealth inclusive of subscriber's contribution would be transferred to government. The Commission recommends notification of a scheme by government for provision of additional relief in such cases consequent to exit from NPS. 57 Framing of Rules and Regulations - The Commission notes that rules and regulating relating to NPS are being framed and notified by PFRDA from time to time. Associations and individual officers have raised the issue of the need for greater involvement of stakeholders in finalizing these regulations The Commission recommends that government encourage the PFRDA to set up a strong consultative mechanism involving the DPPW, DoPT, DFS and some associations of employees for a review of regulations and for finalizing future regulations to bring clarity and remove uncertainty relating to NPS. The Commission also recommends that draft regulations should be widely publicized to enable subscribers to respond to any proposed changes, as normally done by other regulatory authorities. So there is a need to go back to the old scheme or convert NPS into an assured pension scheme. If the pension contribution is Rs1000 per month for 20 years the accumulated interest and Principal at 12% will be Rs1000000 and the Bank will be able to pay Rs10000 per month as Pension at 12% Interest. In fact banks had a Perenial Pension Plan in which this was provided. When most of the loan schemes fetch more than 12% this is very much feasible. Each Bank can maintain the fund themselves and lend it for loans with Interest rate of 12% or above and will be able to pay an assured pension. Instead of allowing the funds to be invested in markets, Banks should be allowed to manage them and the Banks should pay 50% of the last drawn pay as pension. This is very much feasible.
GRATUITY: The Gratuity should be paid at the rate of one month salary and allowances without any ceiling. The gratuity should be completely exempt from payment of income tax. The calculation of gratuity should be changed as we move over to 5 day week. There is an anomaly between SBI and other Banks. Even within SBI Group, the associate Banks are covered under the service gratuity whereas SBI is covered under Act gratuity. We demand that all officers and employees be covered under the service Gratuity.
PROVIDENT FUND: Based on the principles of retirement benefits which allot Provident Fund, Gratuity and Pension for different purposes, the Provident Fund should be at the rate of 12% of the total salary and allowances. The Provident Fund should be payable to all employees. ENCASHMENT OF LEAVE: Encashment of entire leave at credit should also be permitted on resignation, removal and compulsory retirement. Now, half permitted on resignation & full on compulsory retirement. The existing ceiling on encashment of leave should be removed at the time of resignation / superannuation as directed by the Court judgement. The entire 58 amount should be exempted from income tax as in the case of the Central Government Employees. Encashment of PL should be allowed without any ceiling.
MEDICAL BENEFIT SCHEME: A comprehensive Medical Scheme for pensioners/ retirees should be framed and introduced in all the banks as available now in the case of executive directors and CMDs of the Banks, and the medical insurance scheme is to be reversed.
WELFARE ACTIVITIES: A separate allocation of funds for improvements to welfare of the pensioners should be made every year. The facilities like Holiday Home, clinics, Transit House etc., should be made eligible for pensioners also. Present ceiling of 3 % of net profit to be given to welfare activities should be raised to 5 % of operating profit to be given to welfare activities. Suitable life cover should be taken for normal as well as accidental death of employees.
LFC/ HTC FACILITY: LFC / HTC Facility should be extended to the retirees also at par with serving employees or at least once in 5 years.
NEWS PAPER: News paper and fitness allowance can be provided to the pensioners.
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