Bank pension scheme: Resignees get raw deal due to faulty interpretation of rules

Banks have issued circular asking past resignees to apply for pension only if they have completed 20 years of service, though 10 years is all that's needed

Update: 2024-07-21 01:00 GMT
The bank resignees are mostly in the age group of 70 to 80 years. They have been denied their pension for the past 15-20 years. They need to be treated with more empathy. Representational image: iStock

The Indian Banks Association (IBA), on behalf of member banks, discusses and finalises periodical wage settlement and service conditions for bank employees.

On March 8, 2024, the IBA signed the 12th Bipartite Settlement with Workmen Unions. On the same day, the IBA also signed the Ninth Joint Notes with Officers Associations.

Bipartite settlements are signed under the Industrial Disputes Act and hence are legally enforceable. In the same way, the Joint Notes are implemented in letter and spirit.

Pension for bank resignees

The recent Bipartite Settlement and Joint Notes paved the way for permitting the employees who resigned to join the pension scheme of banks. A pension scheme in banks was introduced in 1993. Employees were asked to exercise the option either to continue with the Provident Fund Scheme or to join the new pension scheme.

The scheme of things was like this: those who had opted for pension could ‘voluntarily retire’, while the ones who were under the Provident Fund Scheme could only ‘resign’.

Due to persistent demand from employees, the banks extended another option to join the pension scheme in 2009. But this covered only employees who were on the rolls at that time and also persons who left on a special Voluntary Retirement Scheme (VRS) in 2001. The employees who resigned (and left) were not allowed to join the pension scheme.

New settlement, eligibility

Due to persistent demand from the unions/associations, in the recent settlement, it was provided to allow the resignees also to join the pension scheme, subject to some conditions. The following is the relevant portion in the Bipartite Settlement and Joint Note prescribing the eligibility condition:

Employees and officers who were in service of the Banks on or after 1-1-1986 and had joined the Banks before 1-4-2010 and who have resigned from the service of the Bank on or before 26-04-2010 and who were otherwise eligible to join the pension scheme while in service.

All the public sector banks have their Employees’ Pension Regulation (1995), which is a subordinate legislation and notified under the Central Government Gazette. The said regulation under Chapter IV contains the following:

14 Qualifying Service - Subject to the other conditions contained in these regulations, an employee who has rendered a minimum of ten years of service in the bank on the date of his retirement or the date on which he is deemed to have retired shall qualify for pension.

Hence the ‘otherwise eligible to join pension scheme’ must mean 10 years of qualifying service as per the Pension Regulation 1995. Not only the Bipartite Settlement and Joint Note, even the clearance given by Department of Financial Services, Ministry of Finance (letter dated 16th March 2024 F No.4/8/I/2023-IR) has not stipulated 20 years as service required to be eligible to join the pension scheme.

Faulty implementation by banks

Surprisingly, the banks have issued circulars asking past resignees to submit applications only if they had completed 20 years of service.

However, neither the signed settlement has any such clause nor the government clearance has prescribed it. Moreover, the original Pension Regulation prescribes only 10 years as the qualifying service. In this scenario, the prescription of 20 years as eligible service by banks is patently illegal.

No communication from IBA, govt

When Bank of India was asked under the Right to Information (RTI) Act to provide the document based on which it prescribed 20 years as the required service period, it replied as follows:

Reply: “There is no communication from IBA or Government in this regard. As per IBA letter no. CIR/HR&IR/G2/2023-24/0913 dated March 16, 2024 has advised that to extend an option of pension to the resignees who were otherwise eligible to join the Pension Scheme under the Bank Employees Pension Regulation, 1995. Accordingly, Minimum 20 years of Qualifying service is taken into consideration as eligibility criteria for joining the Pension Scheme." (Ref: HO/RTI/CPIO/PK/274 Dated 07 06 2024).

RTI query to PNB and its reply

Query: Please let me have a copy of the document from the Indian Banks Association or the government or from any other competent authority, which contains instructions to treat qualifying service as 20 years to apply for pension by eligible resignees instead of 10 years as mentioned in the Pension Regulation 1995.

Reply: No such document available. (Reference PNBNK/R/E/24/01042 DATE: 25.04.2024)

The above replies from Bank of India and Punjab National Bank (PNB) show that the banks have arbitrarily fixed 20 years of service as the eligibility criterion.

Pension denied

On July 17, 2024, Lok Sabha MP Anil Desai addressed a letter to Prime Minister Narendra Modi, calling for his attention to the problem faced by bank resignees.

The bank resignees are mostly in the age group of 70 to 80 years. They have been denied their pension for the past 15-20 years. They need to be treated with more empathy.

Banks should not be allowed to deny what has been agreed upon by the government. The banks should not forget that the Supreme Court held that pension is not a bounty or a charity, it is earned by the employee on account of meritorious past services.

(The views expressed here are the author's.)

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