The Central Government and the Indian Banks’ Association (IBA) are sticking to their hard stance of not revising the old pension scheme for bank employees despite the corpus for it rising and the roll count falling, said A. Raghavan, Deputy General Secretary, SBI Pensioners’ Association, Kerala.

The corpus fund available with the banks to pay the pension has increased to Rs 3,57,891 crore in FY22 compared to Rs 3,22,402 crore a year ago, according to a Right to Information (RTI) reply received this year.

The bank employees wanted their pension amount to increase accordingly, but this has not been supported by the finance ministry and the IBA under the legal ground that the Employees’ Pension Fund Regulation 1995 has no provision for updation.

The IBA has also argued that it would not be financially viable to update the old pension scheme. The Associations, on their part, have argued that there is sufficient amount available for updation as the corpus is rising while the old scheme pensioners are a declining population. Since 1 April 2010, the new recruits enrolled come under the new pension scheme where the bank/government is not burdened with any more pension payment, they point out.  

Out of the 7,79,021 serving bank employees as of 31 March 2022, only 2,09,920 come under the old pension scheme. The remaining fall under the new pension scheme, which came into force for all bank employees who joined in 2010.

The total inflow to the pension fund corpus, including interest earned, contributions and provisions by banks, amounted to Rs 61,433 crore in FY22, according to the data available.  The cost to meet the pension payment in that financial year was Rs 24,409 crore only. The RTI was filed by the bank retirees’ forum.

 “During 2022, only 40% of the fund inflow has been expended towards pension payment while the remaining 60% has gone to sit on the corpus fund heap. There is sufficient fund available and we are asking for an updation of the old pension scheme which is just and viable,” said Raghavan, also former general secretary, State Banks’ Staff Union (Kerala Circle).

The figures show that from the fiscal years 2018 to 2022, there has been a 60% increase in the fund from Rs 2,23,588 crore to 3,57,891 crore. At the same time the pension expenditure under the old scheme is gradually diminishing, from 58% in FY18 to 50% in FY21 and 39% in FY22, Raghavan pointed out.

Despite the corpus rising due to interest accruals and other contributions, the old scheme pensioners are not getting any revisions in their basic pension even after 30 years of signing the basic agreements on pension with specific clauses for updation.

“If the present trend continues, by 2045 there will not be anyone to add to bank pensioners’ community and a bulky amount of more than Rs 6,00,000 crore will be there as the corpus fund. Despite this situation being on the horizon, the IBA says it is not feasible to pay pension updation in the banking sector,” said Raghavan.

Pension, a funded scheme, was introduced in nationalised banks through a bipartite settlement signed on October 29, 1993, (covering employees retired on or after 01.01.1986), between unions/associations of bank employees and the IBA, which negotiated on behalf of participating banks. The boards of the respective nationalised banks accordingly made Employees’ Pension Regulations, 1995, in exercise of their powers under section 19 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980.

“The regulations do not have provision for revision of pension. However, pensioners/retirees of banks are being granted dearness relief on pension and the same is being increased from time to time i,e, on half- yearly basis,” said Bhagwat Karad, Minister of State in the Ministry of Finance, in the Lok Sabha  on 31 July 2023.

The IBA, representing 58 banks, submitted an affidavit in the Supreme Court on 24 August 2022 stating that there is no provision in Pension Regulations in 1995 (BEPR, 1995) for any updation in the Pension of Bank Employees and Officers for revision in the old pension scheme for bank employees. Further they said that there could be no parity between the two set of employees as the pension in the banks is paid out of pension funds created out of their contribution to the provident fund. In case of central government employees, the pension is paid not out of pension fund but is treated as revenue expenditure and paid out of budgetary allocation, the IBA pointed out.

The retirees’ Associations point out that agreements relating to Pension to employees in the banking industry were signed with specific clauses for updation.  A Memorandum of Settlement dated October 29, 1993, involving 58 banks and their workmen said: “During the course of negotiations on service conditions of workmen employees in February 1990, the IBA agreed to introduce a pension scheme in banks for workmen employees in lieu of employers’ contribution to PF. The pension scheme agreed was to be broadly on Central Government/Reserve Bank of India pattern, details of which were to be worked out.”

Clause 12 of the agreement said:  “Provision will be made by a scheme for applicability, qualifying service, amount of pension, payment of pension, commutation of pension, family pension, payment of pension, commutation of pension, family pension, updating and other general conditions, etc on the lines as are in force in Reserve Bank of India”.

Subsequently when the small committee was formed after the 1993 agreement with representatives from IBA and major unions to go into the details of the pension regulations covering applicability etc, the committee has approved the draft in the meeting dated 26 March 1994.  The clause 2 of the understandings said, “Formula for updating pension should be on the lines of the same given in the Reserve Bank pension scheme.  Any changes therein should be introduced only after mutual agreement”.

In Reserve Bank of India the retirees’ Pension was revised as per Circular dated March 7, 2019 and subsequently in 2023 July (Circular dated 13.07.2023).

“Senior citizens of the banking industry feel that, as per the facts and figures available and going by the provisions   of the bipartite agreements, the argument put forward by the IBA and government combine is inappropriate,” said Raghavan.