Pension, a Deferred wage!- Fact or Fiction?

S.B.C. Karunakaran

We, as a collective society of working people, have forgotten our illustrious heritage of struggles to assert our rights unmindful of setbacks and defeats suffered during this long arduous journey. Trade unions subscribed in one way or the other to the Marxian theory that profit of capitalists in a product is nothing but surplus value created solely by the labour over and above its wages and this profit belonging to labour is expropriated by the capitalist class. Present plight of the working class is that post 1990 reforms, workers have been totally brain-washed to agree with neo-liberal theories and distance from Marxian theory of surplus value.

It is no wonder therefore that though the entire surplus value belongs to the labour,  the capitalist’s plea of ‘cost factor’ has gained respectability in public consciousness resulting in hard bargain even for a mere portion of the surplus value in every wage revision talks in every industry. In banking sector, retirees have suffered with their cause not having any forward movement at wage negotiations. Though the old pension scheme (DEFINED BENEFIT SCHEME) was introduced in banks in 1995 with euphoria surrounding it due to its promise of improvements in future, the hope of retirees was belied. While the Central Government pension scheme on which bank employees’ pension scheme was modeled, saw very many improvements (e.g. Reduction in eligible period for full pension from 33 years to 20 years, reckoning special pay too for pension, Pension up gradation in addition to regular pension updation, uniform 100% DA neutralization to all retirees, uniform 30% pay as family pension etc)  there was practically no improvement in bank employees’ pension scheme except for introduction of a truncated 100% DA neutralization and much belated parity in family pension.

The following issues remaining unresolved for years are illustrative of the injustice meted to the bank pensioners.

Old PENSION Scheme (Defined benefit scheme) has become close ended with no more addition from 2010 when 2^nd option for pension was extended. As a consequence, the pension corpus that is built will remain intact and revert to banks when there is no pensioner alive as pension payout is reportedly met only from out of corpus income.

Further, having delayed implementation for nearly two decades the pension related issues, the old retirees may not live long to enjoy the implementation of the existing rights, which means that the  pension corpus established for implementation of existing rights will revert to banks in a few years. The implementation of existing rights is not of material consequence as of now to those retired since 2007 as they are already getting 100% DA neutralization. So cost factor is a fiction.  Given below is the rationale behind each major issue-

1) Pension updation – (Implementation pending for 20 years)–

Concomitant joint notes/minutes signed along with Draft Pension agreement of 1993 explicitly provided for pension updation,  DA as per rates obtaining in RBI from time to time, and pension for cessation of service of any nature including resignation and dismissal. The Bank Employees Pension Regulations,1995 framed thereafter specifically provided in Reg 35(1) for pension updation adopting wholly and only the updation  formula of Central Government and RBI for the retirees between 1/1/86 and 31/10/1987 who alone required updation in 1995. However, when Reg 35(1) was amended in 2003 making it mandatory to continuously update pension the same is not implemented even after 20 years when all that is required to be done is incorporation of updation formulae of RBI in Appendix 1 of BEPR, 1995.

2) DA Neutralization at 100% to pre-Nov, 2002 retirees- (Implementation pending for 18 years)–

Also, in Pension Regulation, the bipartite agreement of 1993 on Pension related issues agreeing for payment of DA at rates obtaining in RBI should have been followed. In fact, even the 8th Bipartite settlement of 2005 never stated that DA neutralization at 100% was payable only to those who retired from 1/11/2002 onwards. The discrimination against pre-Nov 2002 retirees is brought by a unilateral decision of IBA when IBA’s mandate on 8th bipartite settlement got lapsed on the signing of settlement.  On signing 8^th Bipartite agreement, a right is vested in the employees and retirees and the vested right became an accrued right to the retirees which cannot be taken away by any unilateral decision, that too without mandate. SC decided the case adversely due to mistake of fact though the question of law was decided in favour of pre-Nov 2002 retirees.

3) Reckoning Special allowance for Terminal benefits including pension and gratuity ((Implementation pending for 8 years)–

As pension is a deferred wage it should also have concomitant revision which is the rationale behind pension updation. The other rationale is that any wage revision has to ensure commensurate increase in terminal benefits. This basic principle of wage revision is missing when special allowance introduced from 10^th Bipartite Settlement onwards is not reckoned for terminal benefits. This is also not legally valid as Supreme court has held more than once that any component of wage by whatever it is called, if paid or payable universally, ordinarily and necessarily to all across the boardit has to be reckoned as basic wage qualifying for all terminal benefits. So pension has to be paid on special allowance too. When Payment of Gratuity Act requires reckoning of basic pay and Dearness allowance paid for payment of gratuity, no settlement can prevail over a statute. Hence, DA payable on special allowance has to be reckoned for gratuity and if DA has to be reckoned for gratuity as per PG Act, It will be an anachronism to exclude the special allowance on which DA is paid for computing gratuity. So, gratuity has to be paid on Special allowance too.

4) Pension to resignees and left-overs (Issue pertaining to a handful but pending for 28 years)–

Though BEPR, 1995 explicitly forfeited pension to resignees and dismissed employees, it was against the Draft Pension agreement of 1993.  The dismissed employees are however taken care in BEPR, 1995 which grants to banks for payment of compassionate allowance to such employees. But the total exclusion of resignees was unthoughtful and unnecessary considering the very meager number who would have resigned AFTER completion of 20 years between 1986 and 1995. The number may not be even 0.1% to 1% in each bank. Can banks be so heartless to deny pension to those who left the bank after serving 20 years merely because they left before 1995? 

5) Banks to bear the cost of IBA group medical insurance for retirees

This absence of empathy is the reason for the refusal to bear IBA group medical insurance premium even though banks are aware of the tragic truth that more than half of the retirees preferred to go uninsured in view of high insurance premium which equals to nearly 3 months pension to old retirees. When Govt instructed banks to bring serving and retired employees under group insurance it expected the banks to bear the premium. Unfortunately, Government is also insensitive to bring insurance premium under GST when the service of insurance is contingent, that too for the sick.

Pension in the evening of their years are yet to see a dawn for their issues. But the struggle goes on in the spirit of camaraderie that even if I am no more, my comrade who survives me can at least enjoy the benefit.