12th BPS: Retirees Oppose ‘Benevolent Ex-gratia’; Legal Fight to Continue

The recent signing of the 12th Bipartite Settlement (BPS) between the Indian Banks' Association (IBA) and the United Forum of Bank Unions (UFBU) on 8 March 2024 has sparked controversy among bank retirees. The 12th BPS, which primarily addresses wage revisions and terms of service for bankers, introduced a formula for an ex-gratia amount to be disbursed to retirees. However, this addition has not been well-received by retiree collectives, who assert that it undermines their legitimate demand for pension updation.

Since the memorandum of understanding(MoU) of 12th BPS was signed, opposition to the inclusion of the ex-gratia clause has been palpable among retirees. Critics argue that this clause disregards the retirees' long standing plea for pension updation. The dissatisfaction among retirees has manifested in their decision to continue their legal battle against the provision.

(Ex-gratia formula for pensioners as prescribed in 12th BPS, based on the period of retirement.) 

The All Kerala Bank Retirees’ Forum (AKBRF) shed light on the demographics of pensioners affected by the ex-gratia clause. According to data obtained by them through the Right to Information (RTI) Act, a significant portion of pensioners falls into advanced age brackets. For instance, retirees aged over 90 years, numbering 1,885, along with 5,211 family pensioners, are eligible for a 17% ex-gratia payment. Similarly, retirees aged over 80 years, totaling 26,242, and family pensioners, numbering 22,215, qualify for lower percentages of ex-gratia payments. The majority of pensioners, comprising 3,97,277 individuals who have retired from PSBs during 1 November 2012 to 31 October 2022, and 87,884 family pensioners, are placed in the last two slabs, receiving minimal ex-gratia percentages of 2% and 3%.

In his statement Suresh M, the General Secretary of AKBRF, emphasised the retirees' demand for pension updation aligned with corresponding wage revisions, akin to central and state pensioners. He highlighted the inadequacy of ex-gratia payments in meeting retirees' needs, attributing them to a lack of timely pension updation, which has resulted in the demise of many retirees awaiting government intervention.

(Krishna Kumar, the general secretary of All India Punjab National Bank Officers’ Federation wrote this note on platform X to express his thoughts on the issue.)

In light of these developments, KT Babu, a bank retiree and pension rights activist with AKBRF, expressed concern over the uncertainty surrounding the ex-gratia clause. Babu noted that the provision is applicable only for the duration of the 12th Bipartite Settlement, from November 2022 to October 2027. Additionally, the clause leaves room for ambiguity regarding annual reviews in April, which may result in either reductions or increases. Moreover, the discretion granted to the IBA and banks to continue or withdraw the ex-gratia payments adds to retirees' apprehensions. Babu highlighted the lack of clarity regarding the funding source for ex-gratia payments, pointing at the opacity regarding the use of pension funds.

He also highlighted the disparities within the 12th Bipartite Settlement (BPS), stating, "The wage hike approved in 12th BPS is 17% of the wage bill for March 2022. With this increment, the workmen employees will get Rs 4,165 crore and the officers Rs 8,254 crore benefits. But in line with the last two bipartites, this agreement also allows a mere 3% loading factor on the basic pay, particularly being careful not to increase post-retirement benefits. A huge amount has been set aside as special allowance which is not included in the determination of PF, gratuity and pension. 26.5% to 31.5% of basic pay to officers and 26.5% to award staff as special allowance, is a continuing story of injustice to retirees.” He also noted that, in similar institutions like the Reserve Bank of India, NABARD or the insurance sector, the case is not the same.

R Viswanathan, a retired Scale-IV officer from SBI in November 2016 and a member of the SBI Pensioners Association Kerala, expressed disappointment over the marginal increment in pension benefits. “While workers received a favorable deal with a 17% increment, retirees had high expectations. But there was no substantial increase in pension benefits. The ex-gratia formula gives negligible increment to those who retired after 2012”, he noted. As per the proposed ex-gratia formula, his pension will see a nominal increment of around Rs 1700 only.

Comparing the situation with other financial institutions such as the RBI and insurance sector, Viswanathan highlighted the absence of pension updation along with wage revisions in PSBs. He emphasized the resulting anomalies, particularly the disparity where recent retirees in lower ranks receive higher pension benefits compared to senior officers retired in the 1990s, whose pensions have remained stagnant.

The contentious ex-gratia clause in the 12th BPS has ignited a debate within the banking community, particularly among retirees who feel their right to pension updation remains inadequately addressed. As retirees vow to persist in their legal battle, the future of pension provisions in the banking sector hangs in the balance, amidst calls for fair and equitable treatment of retirees' financial entitlements. The Supreme Court has listed the case for hearing on 19 March 2024.