SOCIAL SECURITY AND PENSION

In the days of past, the families were living under one roof in a joint family system. Most of the well to-do people were land lords and having a good extent of arable land holding.  The villages where they were living were inhabited by people from all walks of life, be it a priest, a temple servant, a barber, a potter, a cremation ground assistant, farm workers, etc.  Many of these people did not have any land holding in their names and they depended on the other well heeled land lords for their sustenance.  Once the harvest was over, there used to be a practice of measuring the yield and the first few measures will be given to the temple, temple priest, other people who are of service to the entire village.  When every land lord gave the yield like this, the other less fortunate and landless service personnel were getting the required food grains for the year.  This system was working so well that no one went hungry in the villages,  This provided an in-built social security to the less fortunate landless people of the villages. Such gifts used to be sufficient for those people for meeting their needs of food throughout the year.  

The British brought in the present day modern education system to the country as they required people well versed in English and Mathematics to work as translators and clerks in their offices. For managing such a big country like India, the British did not have enough manpower at their disposal and they used whatever manpower they had for maintaining the law and order and supervision leaving the low level works of clerical and later typing works to the Indians who had been educated in their system.   This made the British to compensate their work with monetary payment.  Thus the question of salary became an unavoidable term in the Indian economy.  To meet the ballooning expenditure of the administrative machinery and their frequent war efforts, the British started taxing everything from farm produce to selling of goods.  This created the tax structure for both income and sales.  Based on the need of the British government both at home and in India, the tax structures were modified frequently to earn more than the expenses in India.

The British wanted to show that they were a modicum of fair play and started providing for the social security of the personnel who worked in the various offices of the British government.  They created the payment of pension which is more like a staggered payment of salary but at a reduced levels as the services of the employees who had retired from the service of the government were no longer available to the government.  The practice of making the employee investing for the retired life and returning it to them on their retirement also was brought in by way of implementing the retirement fund schemes.  Thus the social security of the employees working in the government was well taken care of by the British government and the authorities.

In the post independent scenario the same provisions, duly strengthened were followed  and the government servants were well taken care of by the successive governments. The governments aided by the officials made the retirement benefits payable to the employees of the government revisible with every change in the pay structure of the employees in service.  The governments by way of a notification duly gazetted formed a pay panel with representation from officers drawn from different services like administration, revenue, police, defense forces etc.  The officers who represented different services in the government made sure their interests were protected with least concern for the common man.  Whenever there was not enough revenue generation to meet such huge payouts, the governments of the day borrowed from the RBI by floating the gilt edged bonds.  The administrative machinery people both serving and retired made sure that they got the first bite from the revenue pie and all the other works including development, planned expenses etc. got the remaining share. Over a period of time, the payment of salary allowances and pension to the serving and retired government employees overshot the amounts earmarked for the developmental works.  This is exemplified in the statement of the Chief Minister of the state of TN that 63% of the revenue of the state goes to the payment of salary, allowances and pension. 

In the year 1969, the then government headed by the late prime minister Indira Gandhi nationalized the banks, for various reasons, that were held in the private sector. In the years since, the Bank employees were getting the salary and allowances as decided by a settlement between the unions representing the bank employees and the bank management represented by an entity called Indian Banks Association which does not have any legal sanctity except it being a body representing the nationalized banks initially   The IBA for short came into being at the instance of the some of the banks that were nationalized in 1969 and was aimed at providing a forum for getting a platform to discuss common problems and a mouth piece to represent to the government various issues relating to the day to day management in the post nationalization days.  Later it expanded to include other banks like SBI and its subsidiaries, private banks and foreign banks. Slowly the bank managements started using this forum for negotiating with the employees' unions for wage revisions in the banking industry as individual bank wise settlement of wage was being discouraged by the government post nationalization.  

After many decades, the managements of the Banks represented by IBA and the employees' unions agreed for extension of social security by way of pension to the Bank employees.  This was brought into force in the early 1990s through a settlement of wage negotiation between the IBA and the employees' union.  With this remarkable step the bank employees were made to feel that they also were at par with the government employees.  However, the revision of the pension with the successive revisions of pay and allowances of the serving employees is not happening despite a provision for such a move inserted in the pension rules agreed upon by both the parties to the agreement and approved by the government of the day.

In a landmark judgement the Supreme Court of India held that the pension is a deferred wages and cannot be denied to any one and the revision of the same on par with the revision of pay and allowances of serving employees is a must.  However, the Banks and the successive governments have been stalling the revision of pension for the retirees on one pretext or other whenever the pay and allowances of employees get revised.  In a case filed by the RBI employees' union against the RBI and the Union government, RBI had reportedly filed an affidavit saying that the revision of pension cannot be allowed as it will create a clamor for such a revision by commercial bank employees; the commercial banks financial condition is not that rosy for them to take up such a burden.  There cannot be any further specious argument than this.  The Banks have been earmarking, based on the actuarial assessment, a certain sum every year towards the payment of pension and the corpus thus created is a huge sum if all the banks are taken together.   The interest earned on such a corpus itself is sufficient to pay the pension even after revision to the present levels to all the pensioners.  But the government and the IBA, appear to overlook the fact the as per pension rules and clauses in the act, the pension has to be revised as and when the pay and allowances are revised. The non revision has created some glaring anomalies a few instances are illustrated below.

A senior officer of the bank, who retired as a General Manager in early 2000, who opted for pension at the time it was introduced in early 1990s, is drawing lesser pension than a peon, who he appointed while in service, who retired in 2012 or later.  Two officers who retired as a Deputy General Manager in 2003 and 2014 respectively draw two different pension as the pension of the person who retired in 2014 is based on the salary he drew when he retired which was much more than what the other person who retired in 2003.  

After much haggling and hair splitting the issue of One Rank One Pension was implemented for the armed forces in the country in 2016.  Is it not fair for the government (who is the majority share holder owner of the nationalized banks) and the IBA to extend similar benefits to the employees and officers who retired from the Banks?  The payment of pension and revision therefor does not depend on the financial position of the Banks or the bulging non performing assets of the banking system affect the same.  The profit or loss of the banks are determined after providing for pension corpus and other statutory requirements. Providing for pension had also been made mandatory and legally binding on the banks.  

The pay, allowances and pension of the government employees are getting revised without any thinking or eye on the level of revenue collection.  In the last ten to twelve years, the pay, allowances and pension of the government employees (both officers of various ranks and clerical staff) have been revised dramatically upwards leading to a situation that a class I officer of the government who retired in 1995, who is alive and getting pension, is drawing more pension than what he drew as his last pay in service. The argument that the Banks are in poor financial shape does not hold water if you consider the above and the position of a senior bank officer who also retired in 1995. Does the revenue of the government increase proportionately to sustain such a huge drain on the ex-checker by such revision of pension of the huge battalion of government employees who retire in droves every year? The answer to that question is a big no except that the government tinkers with the rates of taxation to increase the revenue. Some of the states have not been able to pay the huge arrears to their employees based on the sixth pay commission recommendations which had been accepted by all the states.  In that scenario, the central government had approved and adopted the recommendations of the seventh pay commission for its employees and officers.  Now, every other state is forced to implement the same.  What is the financial strength of the state governments for meeting such a huge burden?  The TN state government alone is reportedly sitting on a huge debt burden of close to INR 250,000 crores, and the revenue is just sufficient to pay the interest on the borrowing and the huge pay, allowances and pension.  It is likely that almost all the state governments face similar situation.  But with total indifference to such financial mess in the governments, the governments have been revising the pay allowances and pension to their employees and officers.  Whereas the just demands of the Bank employees are being left unheard. With the increasing cost of living at the present inflation level of 6% or lower (7.5% CGA over a period of thirty years), the bank employees are left to live more like beggars than a decent retired life. The government while holding that the Banks financial health is not good to pay the much anticipated revised pension on OROP basis for the Bank employees and officers, allow revision of gratuity to all to a staggering INR 2 million from the earlier INR1 million.  How justified this move of the government is, when the Banks, which does not have financial health to pay revised pension, can afford to pay a gratuity of 100% increase to those who are retiring? That much for social security of the people in the country and the financial thinking by those who manage the governments.