Banks face Rs 12k cr pension liability(business-standard)

Anindita Dey / Mumbai January 28, 2009, 0:45 IST

Public sector banks will have to provide for around Rs 12,000 crore to account for pension liabilities, according to rough estimates made by these banks.

The Indian Banks’ Association is currently in talks with representatives of employees on wage revision. The earlier agreement expired on October 31, 2007 and the revised wages will be applicable retrospectively from November 1, 2007.

Banking sources said the gap between the pension liability of PSU banks and the fund available with these banks is Rs 12,000 crore. This has been worked out as per Accounting Standard 15 of the Institute of Chartered Accountants of India which specifies the accounting treatment of retirement benefits to employers.

When AS-15 became operative in 2006, the initial estimate for the additional pension provisioning was estimated at Rs 6,000 crore. However, the latest wage revision may bring in an additional 275,000 bank employees who opted for provident fund earlier. Banks may also provide for the pension liabilities of 65,000 employees who have retired but have been seeking resort to the defined pension scheme since 1996. This second time option will require additional provisioning of Rs 6,000 crore, thus, making the total liability Rs 12,000 crore.

Sources also explained that banks may have to contribute more to the pension scheme now that the interest rate has started coming down and investments out of the scheme may not yield more .

As per the new standard, an organisation will have to calculate the last salary that will be drawn by an employee and provide for pension and gratuity liability on that basis. Prior to this accounting standard, companies usually provided for the pension and gratuity liability on the basis of their current salaries, but the actual payment is made on the basis of the last drawn salaries.

Bankers said if banks have to provide for the pension scheme, this will have to be adjusted against the total increase in the wage bill. However P. H. Ventakachalam, General secretary of the All India Bank Employees Association and Convenor, United Forum of Bank Unions, said this is unacceptable.

He also said that the IBA offer of a 10 per cent annual increase wages is also not acceptable. The current wage bill of PSU banks is around Rs 2,75,000 crore. Technically, the wage increase is calculated on the basis of the total establishment expense of banks. Employees up to the cadre of general managers are covered under this.

IBA is making bank employees fool

Our beloved late Prime Minister, Smt Indira Gandhi nationalized Banks in 1969 considering all pros and cons. She was very much clear in her vision. You can see her success now in the present world scenario when the American and European countries are in the tight grip of recession. It is a matter of surprise that the norms like Basel I, II , risk managements measures are said to be strictly followed by European and American Banks and they are most effected with economic failures in their countries. Now, it is the turn of our Govt. to reward Indian Public Sector bank employees suitably for following the rules and norms issued by the Govt of India, Finance Ministry in toto. There was a period near 1980 to 1986, when a Bank employee was getting salary more than an IAS officer. Now, the politics have changed the Govt.'s views towards bank employees. They are less in numbers. That is why they are unnoticed from political angle. The Bankers are the pillars of a healthy economy.

IBA proposes 10% wage hike to bank staff, but no decision yet

IBA proposes 10% wage hike to bank staff, but no decision yet

Newswire18 / Mumbai January 23, 2009, 0:11 IST

Indian Banks’ Association (IBA) has proposed a 10 per cent wage hike to bank employees, a source from the banks’ body said today.

“We have just given an indication. The last wage settlement (hike) was 13.5 per cent, effective from 2002. It all depends on how much banks can take as they will also have to bear the load of pension-related benefits, as and when they are revised,” the source said.

Today, IBA met bank unions to discuss wage revision and pension option for bank employees. “However, the unions did not reject or accept it. There was no concrete decision on the wage hike,” he said. IBA will meet bank unions again early next month. As of March 2007, the total salary bill of all state-owned banks stood at Rs 27,500 crore.

IBA decided that employees’ dearness allowance will be merged with their basic pay, with the base year being Consumer Price Index of September 2006, the source said. The dearness allowance was 25 per cent of basic pay as of September 2006. The discussion on pension scheme was inconclusive.

“With interest rates falling, the gap between the corpus that banks maintain for paying pension to employees and the present value of future payment of pension amount has widened,” the source said. Present value of future payment of pension amount means the current valuation of the ultimate pension liability for a bank, which has to be met at a later date.

Pension scheme of bank employees is a defined payment, which means a bank employee will draw pension as per his salary after retirement without any contribution from him. A private pension scheme is a benefit scheme, wherein the individual contributes a certain sum regularly.

“As it is a defined scheme, the banks have to pay huge amount of pension and that has to be provided. Now, the corpus is Rs 11,000 crore, while they will have to pay Rs 17,000 crore as seen from the net present value calculation,” the source said.

Bank mgmt, unions likely to agree on 24% salary hike

Mumbai: The ninth bipartite wage negotiation between the Indian Banks’ Association (IBA) and the United Forum of Bank Employees Unions (UFBU) is likely to be finalised with an agreement for a hike between 24-29% for the employees of the public sector banks. The final meeting between the two parties is taking place on January 21 in Mumbai.

IBA, which is representing the government and managements of banks is reported to have agreed raise bank employees’ wage by 24% while on its part, the UFBU, an umbrella organisation of nine bank employees unions has moderated its demand to 29%.

A source, who is aware of the developments, told FE on condition of anonymity, that ‘Now it seems that both the IBA and UFBU, are likely to reach a consensus figure on what should be the gross hike in the salary of the bank employees.

Earlier the UFBU had demanded a hike not below 50% at any cost, keeping in view the 40% hike for the central government employees during the sixth pay commission.

However, the IBA told the UFBU that it was not possible to consider such a large hike as the hike in wages given to the central government employees was once in a decade, whereas for the bank employees, the wage hike was once in every five year..

The forthcoming meeting will be crucial in another aspect involving the second option of pension for those 2,60,000 bank employees that were deprived of the pension benefits when it was offered for the first time by the bank managements during nineties.

While MV Nair, chairman and managing director of state-owned Union Bank of India (UBI) who is heading the IBA panel during ongoing talks, the UFBU body is headed by its general secretary, CH Venkatachalam.

On the second pension option, the IBA has reportedly agreed it in principle for the 2,60,000 bank employees that were deprived of the pension benefits when it was offered by the government in 1995.

However, it comes with a rider that the employees will have to shell out a sum of 15% from their provident fund (PF), apart from the 50% of the usual share, to avail themselves of such facility.

The UFBU was likely to clear its stand on the issue during the ongoing two-day AIBEA conclave, which would be concluding on Sunday evening.

AIBOC demands early settlement of salary revision

The state unit of All India Bank Officers' Confederation (AIBOC) today threatened to organise a mass movement against the Indian Banking Association (IBA) if their six-point charter of demands are not fulfilled by February.

''The salary revision for bank officers' is due from November 2007. Despite the IBA constituted a negotiating commitee for the purpose, very little progress has taken place on the issue. It was needed for the IBA to offer a decent package to the industry immediately'' AIBOC general secretary G D Nadaf told newspersons here.

He further asserted, pension is a social security measure therefore it is an obligation on the part of the management to extend it to all the employees in place of contributory provident fund.

The progress in taking the decision on this demand by the IBA and the government is unsatisfactory.

''We also demand adequate manpower and regulated working hours for bank staffs,'' Mr Nadaf said.

-- (UNI) --

Union leaders should focus on Wage revision & and another option for existing employees rather than pension for retired employees

Leaders of bank employee who are mostly retired are more interested in pension for the retired employees rather than respectable wage revision for employee of the bank who are presently working under very demanding circumstances due to increase in competition & world wide economic meltdown. Unions should focus on Wage revision not only for retired bank employees.

All the employee of the bank are called upon to write /mail to us(Or IBA) for 40-50 % hike on salary of Banking Industry .

Please write mail to us at
wage.revision@gmail.com

Pension part of right to life: Bombay HC

MUMBAI: Pensioners now have a reason to smile. In a landmark judgment, the Bombay High Court has held that pension is a vital aspect of social security and that the right to receive it constitutes a right to life under the constitution. Moreover, it held that pension must be paid regularly in the first week of the month.

"Deprive a pensioner of the payment and you deprive him or her of the right to life. Delayed pensionary payments place a pensioner in a position of uncertainty and dependence which impinges on the quality of life under Article 21, and the right to dignified existence of the aged," said Justice D Y Chandrachud while directing the transport undertaking of Solapur Municipal Corporation to deposit the pensions of 13 retired employees on the first day of the succeeding month or latest by the seventh day.

The judge noted that pensioners can't be left to the mercy of the administration to receive what is a matter of right.

"Pensioners must lead their lives with a sense of self-respect and dignity," he held as he innovatively developed the rights of senior citizens, especially pensioners, in consonance with the guarantees expected under the constitution. The judgment was passed in a case where the Solapur civic body had challenged a direction of an industrial court which had labelled its action of delaying pension payments inordinately each month as an unfair labour practice and directed
it to credit the monthly pension by the first day of each following month.

The civic body explained that it was in financial difficulties and said it could pay by the 15th and not the first. The civic body argued that the Maharashtra Civil Services (Pension) Rules does not mandate payment by the first of each following month. It says payment has to be made "on or after the first day..."

Govt under pressure to give pension for PSU bank employees

News snap from Hindustan times dated Nov , 2008

"In the wake of the financial sector collapse, widespread job cuts and a lack of social security net in the country, pressure is building up on the government and the managements of the state-owned banks to provide pension benefits to all employees of the PSU banks. The issue has been brought up at the recent meetings between the Indian Banks’ Association and trade unions on wage revision.

Though, this is not the first time this issue has been brought to the fore but in the context of the current fiasco, the government may have to look it, a banking source said.

That apart, the issue has come up at a time when foreign and private sector banks are battling for survival, public sector banks have registered substantial growth in business and profit margins.

Employees, however, would have to forgo their provident fund benefits in order to switch to pension options. “Both pension and provident fund benefits may not be provided to employees,” a banking source said.

This would also mean additional financial burden on PSU banks.

For banks, about 15-16 per cent of the total expenses is directed towards employees. The 27 PSU banks have about seven lakh employees at present. Banking sources said depending on the employee strength of the bank, liabilities could vary from Rs 800 crore to Rs 1,000 crore.

“Trade unions have been bringing up the issue for sometime, but it has not got any weight till now as it would have meant sizeable outflow for PSU banks but now, things are different, we will look into the matter,” an insider said.
"

MEETING WITH IBA ON 24-12-2008

Further to the last round of discussions held with IBA on 15-12-2008, a round of Small Committee-level discussions took place on 24-12-2008 in Mumbai. In this meeting tentative calculations on the possible impact of wage revision demands, index point for merger of DA, etc were exchanged besides the ways and means to work out the manner and possibilities for funding the additional pension cost, etc. The IBA informed us that as per the details received by them, there are 64,250 past retirees (PF optees) between the date of Pension Regulations in 1996 and 31-3-2008 and that the Banks’ PF contributions paid to them amount to Rs. 1,718 crores. To work out the cost of pension option to these retirees, these details have been referred to the panel of common Actuaries and would be taken up for discussions on receipt of the same.
It was decided to continue the discussions in the first week of January, 2009 along with a meeting of the Negotiation Committee.

when we will get our due demands ( wage hike)

When we will get our hiked salary ? we have waited long and cant wait more . Please post latest news about 9th bipartite wage settlement

Why Central Government Peon & Bank PO getting Same Salary ?

Its really ridiculous to listen that the salary of Bank PO and Peon of Central government are same i.e. Rs. 11000. Once working in PSU bank was of high esteem. Bank PO was best available option for finding Bride and grooms .
Its already more than 14 months due , now there is some informal news that IBA is offering only 15-17 % hike to banks employees. On the other hand Central Government Pay commission's announced 40 % hike on wages.

Now the bankers are the lowest paid employees in India and with highest financial risk and working more than 15 hours daily with an all India job

Please post your view about:-

1 . Your % demand in pay hike .
2. Pension option
3. 5 day works
4. Overtime pay , etc.