VRS 2000 EFFECT ON PENSION FUND

WHY PENSION FUND IS ALWAYS IN SHORTAGE?

1. VRS 2000 EFFECT:

USUALLY EMPLOYEES RETIRE ON 60YRS, AND GET COMPUTATION AND START GETTING PENSION.

TILL SUCH TIME BANK WILL CONTIBUTE TO PENSION FUND A CALCULATED AMOUNT FOR THESE EMPLOYEES.

WHAT HAPPENED IN 2000?  BANKS ANNOUNCED A SCHEME WHERE AN EMPLOYEE CAN RESIGN

AND GET COMPENSATION, COMMPUTATION, AND PENSION.

EMPLOYEE MAY BE OF ANY AGE. THERE STARTS ALL THE PROBLEMS.

EMPLOYEE OF AGE 45 ALSO STARTS DRAWING PENSION INSTEAD OF AT 60.

TILL DATE i.e. FOR THE PAST 10 YEARS HE IS DRAWING PENSION BY DEBITING PENSION FUND,

THOUGH HE IS 55 NOW, YET TO ATTAIN 60.

THE POINT I WANT TO PROVE IS:

 1. PF ACCUMULATION OF THESE VRS2000 EMPLOYEES IS FAR LESS THAN THE PRESENT EMPL.

 2. NO CONTIRIBUTION WAS MADE BY BANKS TO PENSION FUND FOR THESE EMPLOYEES FOR REMAINING SERVICE.

 3. PRE-MATURE WITHDRAWAL/DEBIT ALLOWED IN PENSION FUND.

(No. OF EMPLOYEES AVAILED VRS AT THAT TIME WAS ABOUT 11-12% i.e. 1,20,000 EMPLOYEES.

IN NORMAL COURSE EMPLOYEES SEEKING RESIGNATION/VRS PREMATURLY IS 0.01% OR SO WHEN COMPARED TO NORMAL SUPERANNUATION RETIREMENT

 MAJORITY OF THESE EMPLOYEES (90%) ARE PENSION OPTEES.)

THESE PRE-MATURE PENSION AMOUNTS SHOULD HAVE BEEN DEBITED IN P&L A/C OF BANKS

 (AS VRS 2000 WAS FOR THE BANKS TO REDUCE WORKFORCE AND THERBY  REDUCTION IN SALARY EXPENDITURE ) AND NOT IN  PENSION DUND.

HOW  MUCH AMT. MIGHT HAVE BEEN DEBITED SO FOR?

A ROUGH CALCULATION ON LIBERAL ASSUMPTIONS:

No. OF EMPLOYEES :1,00,000  AVERAGE AGE:52    No. YEARS  PRE-MATURE PENSION PAID:8

 PENSION DRAWN BY AN EMPLOYEE: Rs. 8000. THEN THE       

TOTAL  AMT = 100000X8X12X8000=76800000000 i.e 7680 CRORES

THEREFORE IN EVERY BI-PARTITE BANKS SAY THAT THEY ARE SPENDING 26%, 28%, 36% FOR PENSIONERS, AND DEMANDING EMPLOYEES TO CONTRIBUTE 50% OF EXCESS EXPENDITURE.

UNIONS ARE ALSO ACCEPTING FOR THAT, THUS EXISTING EMPLOYEES’ WAGE REVISION (A PORTION) IS UTILISED FOR PAYING PENSION FOR THE RETIRED EMPLOYEES UNDER VRS2000 AND FOR KEEPING PENSION FUND MANAGIBLE.

2. WHETHER BANKS ACTED IN LETTER AND SPIRIT?

IN EVERY BI-PARTITE CERTAIN AMOUNT OUT OF WAGE LOAD WAS NOTIONALLY SET ASIDE FOR ADDITIONAL PENSION COST AS EMPLOYEES’ CONTRIBUTION.

AS PER THIS ARRANGEMENT  170X5+450X5+555X5 (THIS TIME)= CRORES SHOULD HAVE BEEN CREDITED TO PENSION FUND WITH A MATCHING CONTRIBUTION BY BANKS BY DEBITING P&L A/C OF RESPECTIVE BANKS (WITH THEIR RESPECTIVESHARE ) IN THE RESPECTIVE YEARS.

WHETHER THESE TRANSACTIONS TOOK PLACE ACTUALLY IN LETTER AND SPIRIT?

WHETHER UNIONS GOT STATEMENTS OF PENSION FUND AND ENSURED THE TRANSACTIONS AND SATISFIED THEMSELVES?

WHETHER UNIONS VERIFIED WITH ANY ACTUARIES, THE CLAIMS OF BANKS FOR ADDITIONAL PENSION COST?

LET UNIONS REPLY/EXPLAIN.

3.  EVEN AFTER A MONTH, UFBU HAS NOT COME OUT WITH A CIRCULAR STATING THE REASONS/LOGIC/BASIC/TRUTH BEHIND THEIR CHANGE OF STAND FROM 1.6 TO 2.8

IS THIS THE WAY UFBU RESPECT IT’S MEMBERS’ SENTIMENTS?

WE EXPECT UFBU TO ISSUE A WHITE PAPER ON THE PENSION SETTLEMENT.

P. KUMAR , vetrinicchayam@yahoo.co.in