* updation of Pension for Bankers

*Working on updation of Pension*

Facts:-

1. Mass recruitment in Banks started from the year 1969, before which number of staff was very less in Banks.

2. Mass Recruitment was stopped from the year 1992.

3. Again Recruitment started from the year 2010.

4. Staff joined on or after the year 2010 is covered under separate Pension Scheme, namely NPS.

5. Pension Fund is a closed Fund after the year 2010, which means that there are/will not be any new entrant after the year 2010.

6. *Pension fund balance as on 31.03.2018 was Rs. 2.40 lakhs crores.*

7. *In the year 2017-18, interest earned on the Pension Fund was Rs. 18,400 crores, i.e. average rate of interest is 8%.*

8. *In the year 2017-18, Pension of Rs. 14,800 crores was disbursed.*

Assumptions based past facts:-

1. Pension Disbursement will increase by average compound rate of 5% every year due to DA increase.

2. Pension fund will earn same rate of interest i.e. 8% p.a., henceforth.

3. The average life of present pensioners is further 15 years from the year 2018, i.e upto the year 2033.

4. The surplus funds available from the balance of pensioners died before the year 2033, will be available for disbursement of pension to the pensioners surviving after the year 2033.

Working:-

1. Working of position of Pension fund with above facts and assumption is shown in Table A.

2. Working of position of Pension fund with updation with average rise of 22% in the year 2020 and further 15% rise after every 5 years is shown in Table B.

3. Average 22% rise means

(i) 15% rise to retirees before the year 2020,

(ii) 17.50% rise to retirees before the year 2015,

(iii) 21% rise to retirees before the year 2010,

(iv) 24.50% rise to retirees before the year 2005, and

(v) 28% rise to retirees before the year 2000.

Conclusion:-

1. From Table A, it is clear that with normal rise of DA, huge surplus of Rs. 1,95,022 crores in pension fund will be available with the Banks in the year 2033. This surplus is many times more than the funds required for payment of pension to the pensioners surviving after the year 2033.

2. From Table B, it is clear that even periodic updation as above is granted, present funds are sufficient upto the end of year 2033, when most of the Pensioners have said good bye to this world. The surplus funds available of the balance of pensioners died before the year 2033, will be available for disbursement of pension to the pensioners surviving after the year 2033.

Thus, the contention of IBA that Pension funds are not sufficient for up-gradation, is false. On the contrary, Banks would not be required to contribute anything in present as well as in subsequent BPS for upgradation of Pension. If the Banks contribute something, more liberal upgradation may be possible. (Source – Bank Pensioner)