Pension issue in State Bank of India
`Ceiling remained static at Rs. 4,250 for over nine years despite repeated recommendations'
Whenever there was an upward revision in wages, negotiations were initiated with the management on pension and the decision arrived at was put up to the Finance Ministry for approval.
DIRECT ACTION: A customer sits beside an ATM counter of the State Bank of India in Kolkata on April 5 as thousands of employees of the bank continued their nationwide strike.
PENSION SCHEME was introduced during the period of East India Company, when it established Presidency banks in Bengal, Bombay and Madras in the 1800's. When these banks were amalgamated into Imperial Bank of India in 1921 through a special Act by the British rulers, the Imperial Bank of India Pension & Guarantee Fund was constituted for the purpose of payment of pension to their employees on their retirement.
In 1955, when Imperial Bank of India was transformed into State Bank of India by a special Act a similar Pension Fund was constituted with a corpus. Under its Rules and Regulations, of the Pension Fund, every month 10 per cent of the salary of each employee was apportioned by the bank towards the corpus. This corpus, over the years, had swelled by March 2005 to Rs. 7,500 crore. The pension payable to employees after retirement and the family pension paid is debited to the pension fund.
The fund is administered by trustees as per the terms and conditions of a Trust Deed. As per Section 50 of the State Bank of India Act, any regulation in connection with the establishment and maintenance of the fund for the benefit of the employees has to be framed with prior approval of the Reserve Bank of India and the Central Government.
Quite in contrast to the situation obtaining in State Bank of India, a pension scheme was for the first time introduced in the banking industry in 1993 in lieu of Contributory Provident Fund with retrospective effect from January 1, 1986. The Contributory Provident Fund was taken as corpus in respect of public sector banks other than State Bank of India.
In view of the operation of a distinctly defined pension scheme in vogue in State Bank of India for over 100 years, a specific clause was incorporated in the industrywide settlement on wage revision and other service conditions including pension that the scheme introduced for payment of pension and family pension shall not bind SBI employees and that improvements in the pension scheme obtaining in SBI could be discussed and settled by the bank with its recognised federations. Similarly, when subsequent industry level settlements on wage revision and other service conditions including pension and family pension (VII & VIII) were entered into between the Indian Banks Association and the Workmen and Officers' organisations, SBI and its employees were excluded from their purview in regard to pension.
The above terms of the industry level settlements were to the full knowledge of the banking department in the Finance Ministry.
In such a context, neither the SBI management nor the recognised federations of workmen staff and the officers of the bank were precluded or debarred from negotiating with the management for adequate improvements in the pension scheme and family pension commensurate with the periodical revision in wages and other service conditions once in five years. Accordingly, every time there was an upward revision in wages of employees and officers, negotiations were initiated with the management on pension and family Pension and the consensus arrived at was put up to the Finance Ministry and the Reserve Bank of India for prior approval before amendment of the related pension rules.
It would be relevant to mention that even before the industry level settlement for payment of pension at 50 per cent of the last drawn pay, employees in Imperial Bank of India and subsequently in SBI were paid more than 50 per cent of the last drawn pay as pension as per the formula stipulated in the Pension Rules of Imperial Bank of India Pension Fund and subsequently of the SBI Pension Fund.
It was in 1983-84, when retired senior officers were deprived of 50 per cent of the last drawn pay as pension, the Imperial Bank of India Pensioners Association, Delhi, approached the Supreme Court for immediate redress of grievances consequent on which SBI had to amend the rules raising the ceiling on pension to Rs. 1,600, which worked out to 50 per cent of the last drawn pay of such senior officers. Again with the upward revision in wages, the pension ceiling in SBI had to be increased to Rs. 2,400 which also worked out to 50 per cent of the last drawn pay at the material time. This was also done at the intervention of the Supreme Court in 1987.
Subsequently, when another industry level settlement, namely, Fifth Bipartite, came into force, negotiations within SBI for upward revision in pension and family pension were held but recommendations put up by the management were not considered by the Finance Ministry by misusing the powers vested in its as per Section 50 of the State Bank of India Act.
A repeat action was performed by the Finance Ministry since 1997 without considering the relevant factors and the statutory obligations coupled with the commitment given to the bank employees resulting in the pension ceiling remaining static at Rs. 4,250 for over nine years while the ceiling in the banking industry was raised 3-4 times commensurate with the periodical upward revision in wages of bank employees.
It is claimed, according to media reports, that the Finance Ministry is apprehensive of wide ramifications in the industry if the demands of SBI employees are conceded.
The demands, in simple terms are : 50 per cent of last drawn pay as pension on a par with RBI, public sector banks and other government services, upward revision in family pension on a par with other sectors and commutation formula on a par with other sectors, D.A. neutralisation on a par with RBI and public sector banks.
The above demands are not in any way over and above the industry level settlement in regard to pension. Hence the Ministry's apprehensions are totally baseless.
It is relevant to point out that even all the above demands can be fully met from the interest of over Rs. 700 crore earned on the corpus of the State Bank of India Pension Fund and not a single paisa needs to be spent from the corpus or from the State's exchequer. While this is the situation, why should the Finance Ministry and the Finance Minister refuse to clear the recom- mendations put up by the SBI management duly endorsed by the RBI and the Indian Banks' Association? It is a mystery as to why they are not able to give the reasons for not clearing the proposals pending with them all these years, especially when the proposals for review of pension ceiling and other connected demands are not in any way beyond what has been granted at the industry level.
Keeping in view the pronouncements of the Constitution Bench of the Supreme Court in the famous D. S. Nakara v Union of India, the Chairman of the Fifth Pay Commission, Justice Rathnavel Pandian gave radical recommendations for improving the outmoded pension scheme for government employees which enabled the government pensioners to live with decency, independence and at a standard equivalent to the pre-retirement level. As such, why is the Finance Ministry hesitant to uphold and implement the principles laid down by the Constitution Bench of the highest court of the lnd? It is time the Finance Ministry pondered over the gravity of the situation and took remedial action.
Former General Secretary, State Banks' staff union, Chennai circle.
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