The pension worries of bank pensioners

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The finance minister must speak on this critical issue

With special permit (C) No.(s). 5561/2016 was accepted by the Supreme Court on January 20, bank retirees were hoping for some favorable orders for their pension upgrade, which has been going on for three decades. But to their disappointment, the case was ordered to be listed after three months because the attorney who appeared on behalf of the defendant(s), including the Indian Banks’ Association, argued that the committee responsible for representing the petitioners and similarly placed persons is pending to be reconstituted.

Until 1993, bank employees had a contribution-financed pension fund without pension insurance. On October 29, 1993, an industry-level agreement was reached between the Indian Banks Association and bank workers’ unions, paving the way for the introduction of a pension scheme in place of the Contributory Provident Fund as in the RBI. A similar joint note was also signed with the Association representing officers. Section 12 of the said settlement provided for the formation of a small committee of IBA and union representatives to work out details in a manner similar to the RBI pension scheme and the Central Civil Service pension scheme for central government employees.

Said small committee in 1994: ‘The formula for updating the pension should be the same as that given in the Reserve Bank pension scheme. Any change to it should only be introduced by mutual agreement.”

Although the Reserve Bank of India has allowed its employees to upgrade their pensions, the bank’s retirees have been receiving their pensions without change for three decades.

When the matter was brought to the attention of Finance Minister Nirmala Sitharaman, she expressed her concern in an interview in October 2020 and again in a conversation the following month: “I want bank employees to get their entitlement. Many pensioners wait a very long time for this. Yesterday I had a meeting with Rajkiran Rai from IBA. I spoke to him too. We need to take care of bank employees, especially their families and the pensions of retirees.”

Although it was announced that a committee had been formed by the Indian Banks Association, nothing happened on the ground. If the civil servant’s pension is paid from the tax revenue of each year, it is a tax on the people. The bank pensioners’ pension is paid from the profits generated by the banks. Adequate provision has already been made under the existing pension regulations for payment to the last pensioner. If a pension increase is granted, only the additional amount from the profit is to be used. All-in-one accrual is not required as RBI may allow amortization of expenses over a period of five years or more.

Without pension updates, bank pensioners had a miserable life in the 70s, 80s and 90s. Pensioners only pay for three months of their pension for health insurance, as banks only provide group insurance but leave the payment of premiums to individuals.

The former pensioners receive alms as a pension. Persons who retired as directors in the past receive a lower pension than an employee who is now retiring because the pension is not adjusted.

Most importantly, the Indian Banks Association has not recognized a retiree association and there is no body representing retirees at the banks. The workers’ unions represent only the workers and have their own problems to discuss and settle.

Even after a year and a half, the finance minister’s request has not been taken up by the banks. Senior retired bankers expect her to walk the talk.

(The author is a retired banker. The views expressed are personal.)

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