Pension Buyout Scheme in DBS Bank (eLVB) for pensioners

Hari Rao

The Scheme:

DBS Bank India Ltd which has acquired Lakshmi Vilas Bank in November 2020, had already implemented Pension Buyout Scheme for the serving employees, who had earlier opted for LVB Pension Regulations-1995, through a settlement signed with the LVB Employees Union (NCBE) on 26.07.2022 (Pl read BWU editorial article dated 13.08.2022) . 

Now, it has proposed a similar “Buy Out Scheme” for pensioners and family pensioners covered under LVB Pension Regulations 1995.

As per the new scheme, the pension received by pensioners and family pensioners hitherto will be frozen, which means there will be no restoration of full pension after commutation period and there will be no Dearness Allowance payable to the pension. The Scheme says the new pension will be a fixed amount, but it will be an additional higher monthly pension based on the Return of Capital (ROC) / annuity rate, along with existing pension amount (base pension) they were receiving.

Types of annuity pension:

There will be two types of pension option available namely Single life ROC and  Joint Life ROC.

As per the Single Life ROC Scheme, the pension as explained above will be paid to the pensioner and on his demise, legal heirs are not entitled for any pension.  They will get one lumpsum amount of Return of Capital which is tax free as per existing Income Tax regulations.

As per Joint Life ROC Scheme, the pension will be paid to the spouse of the pensioner after his demise, and after the demise of the spouse or both, the legal heirs will get lumpsum amount of ROC which is tax free as per existing Income Tax regulations.

Reason for the Pension Buyout Scheme:

The reasons attributed by DBS Bank for the new scheme are the following: there is no such defined pension scheme as per Pension Regulation 1995 available in DBS Bank which is a foreign entity. To run and maintain the pension process a big administration set up has to be maintained for statutory compliance, engaging actuarial consultants to calculate future payment liabilities and to plan the investments accordingly.  As per the earlier scheme the Bank has to incur additional costs due to increase in DA or restoration of commuted value, etc., All these burdens can be done away with the new scheme which is paid from the ROC invested in annuity insurance schemes and the insurance company which will be paying the fixed amount of pension every month and on the demise of pensioner/family pensioner the lumpsum amount will be paid to the legal heirs which is not available in the old pension scheme.


Though the Pension Buyout Scheme is said to be a voluntary one, considering the bundle of benefits, the management says, that the pensioners and family pensioners should be encouraged to opt for the new Scheme. 

It is nothing but another form of New Pension Scheme where pension will be paid by the Insurance company as per annuity policy taken which will be a fixed amount and the invested ROC amount will be paid to legal heirs after the pensioners’ demise. The Insurance Company engaged by the Bank is responsible for all kind of service related queries including payment of ROC to legal heirs.  The Bank management will be absolved from the liability and responsibility of payment of pension permanently.

As per the pension scheme under Pension Regulation Act 1995, Dearness Allowance, paid for basic pension, is revised every six months. Full pension will be restored after the commutation period.  Moreover, Trade Unions under UFBU are fighting for the legitimate demand of updation of pension.  All these existing benefits are not available in the proposed Pension Buyout Scheme.

It should be remembered that during the global economic meltdown in 2008, the pension funds invested in insurance companies were wiped out and the pensioners world over were left in lurch. The government wants our senior citizens lead a dignified life. Yet the employers are snatching away the pension benefits to quench their thirst towards greedy profits. What is happening in DBS bank is harsh reminder to other bank employees. Can this be allowed to happen ?

This scheme which absolves the employer from any responsibility for future pension payments, should be rejected  totally by Unions, employees and retirees.  


  1. Thanks for throwing more light.Today in France the pension struggle is also because of the mismanagement of the pension fund. A deliberate corrupt investment of these funds will wipe out everything. It will endanger the current pension as well. It’s a caution to UFBU to be alert!

  2. Danger for Pension is the Real Risks.
    UFBU must strengthen its fight for Old Pension Scheme for Entire Bank Employees!

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