VRS Optees - An Unwanted Lot, Journey so far…….
Journey of VRS Optees had been quite turbulent, full of pitfalls.
In the year 2000 PSB’s offered the VRS scheme. The main features/attractions of the scheme were as under;
Pensionary & other terminal benefits will be provided from the date of voluntary retirement.
In addition to the above two months of salary for each completed year of service, with a maximum of remaining period of service or five years, will be provided to the VRS Optees.
1. 7th Bipartite Settlement: (Agreement dated 27.03.2000)
# 16. PENSION In relation to an employee who retires or dies while in service on or after the 1st day of April, 1998 ‘Pay’ for the purpose of Pension shall be the aggregate of the pay drawn by the member of award staff in terms of the sixth Bipartite Settlement dated 14th, February, 1995 and the dearness allowance thereon calculated upto index number 1616 points in All India Average Consumer Price Index for Industrial Workers in the series 1960=100. This shall be subject to the necessary amendments to be made to the relevant provisions of Bank (Employees) Pension Regulations, 1995".
2. Now three anomalies were created for VRS optees’
Pension on pre-revised basic pay. ( Basic pay as per 6th Bipartite + DA calculated on tapering formula). This anomaly was corrected through 8th Bipartite Settlement w.e.f. 01.05.2005, but no arrears of pension (from the date of retirement upto 30.04.2005) & that of commutation of increased pension, were paid. Fresh PPO’s were issued, revising the pension from 01.05.2005. Hon’ble Supreme Court vide orders dated 13.02.2018 permitted the arrears with interest & 9%. However while making payment banks had denied the benefit of Regulation 41, of Pension Regulations (See detailed note below).
Denial of 5 years notional service benefit on voluntary retirement in terms of amendment in VRS scheme after the close of VRS scheme. This anomaly was corrected on the basis of Hon’ble Supreme Court judgement dated 27.03.2009. Arrears were paid & fresh PPO’s were issued.
Denial of 100% DA neutralisation for pre- Nov-2002 retirees.This anomaly has been corrected w.e.f. 01.10.2023 & arrears has been denied.
3. 8th Bipartite Settlement: (Agreement dated 02.06.2005)
# 16. Pension (in Banks other than State Bank of India) In respect of an employee other than the employee in State Bank of India, who is a member of the Pension Fund, who retires or dies while in service or otherwise ceases to be in employment on or after the 1st May 2005, ‘Pay’ for the purpose of pension shall be the pay as in clause 6 of this settlement. This shall be subject to the necessary amendments to be made to the relevant provisions of Bank (Employees’) Pension Regulations, 1995. Note: The Bank (Employees’) Pension Regulations, 1995 does not apply to the employees of State Bank of India.
4. 9th Bipartite Settlement: :(Agreement dated 27.04.2010 )
# 3. Further to Clause 7(2) of the Bipartite Settlement dated 2nd June 2005, it is agreed between the parties as under:
(i) On and from 1.5.2005, in the case of employees who retired during the period 1.4.1998 to 31.10.2002, dearness relief shall be payable for every rise or be recoverable for every fall, as the case may be, of every 4 points over 1684 points in the quarterly average of the All India Average Consumer Price Index for Industrial Workers in the series 1960=100. Such increase or decrease in dearness relief for every said four points shall be calculated in the manner given below:
5. Note on Regulation 41, of Pension Regulations
i). 1616-1684 Arrears - Commutation
The matter concerns, refixation of pension and consequential arrears with respect to the bank employees who retired or died while in service on or after 1.4.1998 and before 31.10.2002.
Let’s look at the operative part of the various judgements.
ii). Operative part of Karnataka High Court Judgement dated 21.04.2011.
# 13…..bank shall pay the differential amount of pension and commutation value of pension to the petitioners on that basis,within a period of eight weeks, if not earlier and in the event of failure to make the payment as above, the banks shall be liable to pay interest at the rate of 10% on the said amounts till the date of payment.
iii). Operative part of SC Judgement dated 13.02.2018.
“# 34. Thus, we set aside the judgement rendered by the High Court of Delhi and affirm that of High Courts of Karnataka at Bangalore and the High Court of Madras. The appeals filed by the Banks are dismissed and the appeal filed by the Association is allowed. Resultantly, let the amount which was due and payable be paid with 9% interest, be calculated and paid within four months from today.
iv). From the above judgments it is clear that commutation is the important part of the arrears to be paid to the concerned employees.
Thus the arrears to be paid will have the following three components.
Arrears =
Difference of (Basic Pension + DA) with interest @9% plus
(+) Commutation Value with interest @9% minus
(-) monthly recovery of commutation amount (⅓ of difference of Basic Pension) for 15 years from the date of retirement.
v). Now the moot point in payment of arrears of commutation is the recovery of commutation amount (⅓ of difference of Basic Pension) for 15 years from the date of retirement.
Here I wish to draw attention towards relevant portions of Regulation 41, of Pension Regulations which reads as under:-
# 41(2) An employee shall indicate the fraction of pension, which he desires to commute, and may either indicate the maximum limit of one-third pension or such lower limit, as he may desire to commute.
# 41(4) The lump sum payable to an applicant shall be calculated in accordance with the Table given below.
XXXX
Notes (2) An employee who had commuted the admissible portion of pension is entitled to have the commuted portion of the pension restored after the expiry of a period of fifteen years from the date of commutation.
XXXX
Notes (6) The commutation of pension shall become absolute in the case of an employee, (a) retiring on superannuation or voluntary retirement who submits an application for commutation of pension before the date of retirement, on the date following the date of retirement:
# 41(6) An applicant who is authorized a superannuation pension, voluntary retirement pension, premature retirement pension, compulsory retirement pension, invalid pension or compassionate allowance shall be eligible to commute a fraction of his pension under these regulations.
Provided that on and from 1.7.2003, in case of an applicant in whose case the commuted value of pension becomes payable on the day following the date of his retirement or from the
date from which the commutation becomes absolute, the reduction in the amount of pension on account of commutation shall become operative from its inception. Where, however, payment of commuted value of pension could not be made within the first month after the date of retirement or within the first month after the date when the commutation becomes absolute as the case may be, the difference between the normal monthly pension and the commuted pension shall be paid for the period between the date on which commutation becomes absolute and the date preceding the date on which commuted value of pension is deemed to have been paid.
(Amendment Notified in Gazette of Government of India Dated 24.07.2004)
vi). In the present case, as the commutation value is being paid after 01.07.2003 and a period of more than 15 years has already passed from the date commutation had become absolute, banks are not entitled to make any recovery on account of commutation (⅓ of difference of Basic Pension).
However, even if one takes a very narrow interpretation of the Regulation 41(6) which is operative w.e.f. 01.07.2003, banks at the maximum can recover commutation amount (⅓ of difference of Basic Pension), only from the date of retirement upto 30.06.2003.
vii). I recall from memory, the similar high handedness attitude of the bank managements, while making payment of arrears of pension for 5 years notional service to retirees under Voluntary Retirement Scheme (EVRS-2000) allowed by SC in 2009. At that time also banks recovered commutation amount (⅓ of difference of BP), from the date of voluntary retirement upto the date of payment of arrears in 2009, blatantly disregarding the Pension Regulation 41.6, as above.
viii). The said recovery of 180 instalments of commutation amount (1/3 of differential of pension) with interest, was illegal on the following grounds.
a. In non of the judgements of Hon’ble Supreme Court of India / HIgh Court of Karnataka (citation quoted in the trailing mail), banks were permitted to charge interest on the 180 instalments of recovery of commutation amount (1/3 of differential of pension), either explicitly or implicitly.
b. While making recovery of 180 instalments of commutation amount (1/3 of differential of pension) with interest, provisions of Regulation 41(6) of Punjab National Bank (Employees') Pension Regulation, 1995, have been ignored with impunity. Relevant provisions of the regulations reads as under;
# Regulation 41(6) An applicant who is authorised a superannuation pension, voluntary retirement pension, premature retirement pension, compulsory retirement pension, invalid pension or compassionate allowance shall be eligible to commute a fraction of his pension under these regulations.
Provided that on and from 1.7.2003, in case of an applicant in whose case the commuted value of pension becomes payable on the day following the date of his retirement or from the date from which the commutation becomes absolute, the reduction in the amount of pension on account of commutation shall become operative from its inception. Where, however, payment of commuted value of pension could not be made within the first month after the date of retirement or within the first month after the date when the commutation becomes absolute as the case may be, the difference between the normal monthly pension and the commuted pension shall be paid for the period between the date on which commutation becomes absolute and the date preceding the date on which commuted value of pension is deemed to have been paid.
Disclaimer: The sole purpose of this blog is to create awareness on the subject and must not be used as a guide for taking or recommending any action or decision. A reader must do his own research and seek professional advice if he intends to take any action or decision in the matters covered in this blog.
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