Retired bank employees who want to join a pension scheme will have to refund the entire amount paid by the bank to their provident fund account and the interest accrued thereon, along with their share in the contribution
Retired bank employees, who had opted for provident fund (PF) and gratuity at the time of retirement instead of a pension, are feeling left out from the benefits of the new wage settlement signed between the Indian Banks Association (IBA) and the United Forum of Bank Unions (UFBU), a body comprising nine bank unions.
According to the new wage agreement signed on 27 April 2010, about 8 lakh employees from 26 public sector banks (PSBs), 12 private sector and 8 foreign banks will get a salary hike of about 17.5%. The revision will cost banks Rs4,816 crore, including arrears payment from November 2007, which will be given in a lump sum, K Unnikrishnan, deputy chief executive, IBA said.
A total of 2.7 lakh employees and 60,000 pensioners will be benefited by the second pension option in the agreement. For employees who had not joined the pension scheme in 1995, the new agreement gives them another opportunity to join the scheme. However, there is a catch. They will have to refund the entire amount of the bank's contribution to their PF and interest accrued thereon received on retirement with the employee’s share in the contribution.
"On an individual basis, this payment over and above the bank's contribution to PF and interest thereon has been worked out at 56% of the said amount of the bank's contribution to the PF and interest thereon received by the employee on retirement," the agreement, a copy of which is with Moneylife, says.
According to a comment posted by ‘Bhas’ on forestlaneshul.com, new pension optees will have to pay 2.8 times of their November 2007 revised salary from the earlier agreed 1.6 times. "All unions kept mum on this, which came to light only after signing and yet they say this is historic. All plans were accepted as per IBA modifications, and for this it has taken almost two and a half years," the comment reads.
CH Venkatachalam, general secretary, All India Bank Employees Association (AIBEA) and convener for the UFBU, said, "People had made the mistake of not joining the pension scheme earlier and some of them are still not ready to accept it. What they are not willing to understand is with the pension scheme, they can receive a regular income more than the interest they may earn. Plus this pension has a provision for dearness allowance to be revised every six months."
Refunding the entire amount of the bank's contribution to their PF and interest accrued thereon received by the employee on retirement with the share in contribution has not gone down well with some retired bank employees. Whether the employee retired in 1997 or in 2007, there is no differentiation and both have to refund the entire amount of bank’s contribution along with interest. For example, an employee who retired in 1997 might have received Rs6 lakh as terminal dues. If he invests the same amount at an average interest rate of 8%, then he would receive about Rs48,000 per year just as interest. From 1997 to 2010, he most probably would have received more amount as interest than his investment.
"This second pension offer is nothing but a cruel joke on retired bank employees. Retired bank employees, especially those above the age of 66, are finding this offer unviable and unfair since they have to pay a heavy sum and chances of recovering the principal amount are less," said Jagdip H Vaishnav, a retired bank employee.
When asked to explain the contribution and pension per month, Mr Venkatachalam said that if for example, an employee had received Rs10 lakh as PF and gratuity on retirement, then he will have to refund this Rs10 lakh plus around Rs5.5 lakh as his own contribution. However, the bank will also contribute around the same amount and the actual amount an employee has to refund comes to Rs10 lakh. To add to this, he will receive pension arrears of eight months at a rate of about Rs15,000 per month. If he can use this money for the refund amount, then his actual contribution to the new pension scheme comes to just about Rs8.5 lakh. He will continue to receive Rs15,000 every month thereafter. In addition, after every six months, the dearness allowance component in his pension will increase, so he will receive more money. On the other hand if he invests Rs8.5 lakh, then he would get an interest of about Rs68,000 for a year or Rs5,700 per month. Now he has to decide whether to opt for Rs15,000 per month or Rs5,700 per month, Mr Venkatachalam said.
One problem with the pension scheme is that some of the retired employees may not have enough cash left with them since usually people try to buy expensive things such as a home or a four-wheeler from the money earned at retirement. They most likely would find it very difficult to garner the required money so as to receive monthly pension or regular income.
Vishwas Utagi, secretary, AIBEA said, “We have been advising employees to keep the funds they received at the time of retirement separate, in case they plan to opt for the new pension scheme. So, I think refunding the bank’s contribution and interest should not be an issue.”
The UFBU has been asking the IBA to allow another option to for those to join the pension scheme—employees who were in the service of banks prior to 29 September 1995 in case of PSBs, and 26 March 1996 in case of associate banks of the State Bank of India (SBI) and who did not opt for the scheme. IBA, however, was not ready for the same due to cost considerations. The UFBU then offered to share a portion of the initial funding liability on a one-time basis for extending pension to the non-optees.
An actuarial valuation of liability by actuaries showed an estimated funding gap of Rs6,000 crore. The UFBU offered to contribute 30% or about Rs1,800 crore to bridge the gap for retired employees. An actuarial valuation on similar lines as conducted for serving employees had estimated the funding gap as Rs3,115 crore for those retirees or their families.
“Moreover, as per the new wage agreement, bank employees, both in service and retired, will receive arrears effective from November 2007 and it would help them while contributing to the 30% funding gap,” Mr Utagi said.
UFBU is receiving calls from children of retired bank employees asking how much their parents will have to pay to get a regular monthly income and these children are ready to pay from their own pockets, Mr Venkatachalam added.
Online recruitment activity rose in 13 of the 14 occupational groups tracked, with online job demand for healthcare and engineering/production professionals witnessing the greatest monthly increase
Riding on improving business confidence, corporate India's online hiring activity rose for the fifth month in a row, reports PTI.
The Monster Employment Index, a monthly gauge based on a comprehensive review of employer job opportunities from a large selection of online job sites, climbed by 7% to 125 in April, from 117 in March.
"The April rise in Monster Employment Index India is a positive sign as employers continue to expand hiring efforts at the beginning of the second quarter," Monster Worldwide managing director (India, Middle East and Southeast Asia) Sanjay Modi told reporters.
With this, the online employment availability in healthcare, bio-technology, life science and pharmaceuticals witnessed its largest monthly rise. Overall, job opportunities rose in 18 of the 27 industry sectors tracked in the survey.
Healthcare led the rise with a 29-point gain in April, indicating a relatively high level of online recruiting in support of scientific research and development activity.
The banking, finance and information technology (IT) sectors also edged higher in April. Consumer-driven sectors, such as production and manufacturing, automotive, home appliances and real estate, witnessed strong growth over a three-month period.
In the IT industry, online job demand increased by 51% from January levels. Meanwhile, education was the only industry to grow month-over-month, over a six-month period.
"With other indicators, such as business confidence, improving and most industries and occupational categories in the index registering recent positive trends, we hope to see continued improvement in the future," Modi added.
Online job demand rose at all the 13 cities monitored by the index in April, with Kochi, Coimbatore and Ahmedabad registering the largest jumps.
Among major metropolitan areas, brisk hiring activity was witnessed in Mumbai.
Delhi-NCR and Bangalore grew by 5% over March levels, though hiring activity in Bangalore was relatively restrained compared to the previous month, the study said.
During April, online recruitment activity rose in 13 of the 14 occupational groups tracked, with online job demand for healthcare and engineering/production professionals witnessing the greatest monthly increase.
If you wish to win the trust of your consumer, integrity and transparency are the order of the day
What is the secret to becoming a legendary brand? Simple—great quality and a lot of honesty. This could be grandma’s success recipe. Think Toyota, Coca Cola, Apple, Cadbury, and you know what I’m talking about. These brands have survived the test of time not just because they sell and service great stuff, but also because there is integrity to their brand image—squeaky clean is a phrase you have come to associate with them. Remember the days when Cadbury’s name was sullied with worms? Not only did they rectify the transgression but also employed Amitabh Bachchan, then associated with solidity and integrity (this was the phase when he had paid off all his debts and his brand equity was at its highest) as its brand ambassador. Remember the television commercial where the Big B was exhorting people to get back to Cadbury and not worry about anything? Eventually people did it and I doubt if anyone even remembers the worms that clung on to the sweetness of Cadbury. That’s the effect of integrity. If you’re honest and you produce a great product, who cares about the ups and downs that you may have had during the course of your journey? As long as you’re honest, everything else is irrelevant.
The Indian Premier League (IPL) was emerging as a formidable brand till the Lalit Modi-BCCI row rocked the boat. Kickbacks, betting, financial irregularities found their way in, just as the IPL was being touted as the biggest cricketing event in the history of the game, especially post Kerry Packer.
We know what Lalit Modi has done to the game—he has created a heady cocktail of cricket, cinema, cheerleaders, controversy, bickering, auctions, grand associations and partnerships… the works. Today IPL stands on its own feet. It is not a cricketing event anymore; in fact, it is not just a sport anymore. IPL is IPL, all by itself. There are players who play test cricket, one-day internationals (ODIs), 20-20s and then there are those who play IPL. Subhash Chandra started the ICL (Indian Cricket League) before Modi and BCCI stepped in but today whoever remembers the ICL? So what was the secret of Lalit Modi’s success? Who could have imagined that 100 plus years from its inception, cricket would shimmer anew in a shorter-sexier version (pun intended)?
But today all that is under the shadow of a very dark cloud. It all started with Shashi Tharoor and Lalit Modi going all out on a tweet-war. Their umbrage and counter-umbrage on Twitter (irony, irony— Twitter itself is among the biggest Internet brand these days but let’s leave that story for another day). And then the ruckus started. Fingers being pointed at each other, income-tax (I-T) raids, ministerial probes and finally the infamous suspension of Lalit Modi after the final of IPL III between Chennai Super Kings and Mumbai Indians. The details are irrelevant –did Preity Zinta, Shilpa Shetty and Jay Mehta actually have shares in the IPL before they became co-owners of their team, what is the position of Chelaram’s in the Rajasthan Royals, did Sony bag the telecast rights legally, will Lalit Modi get back at his detractors, is there more than meets the eye?
Irrespective of who the actual culprit is, the IPL has lost its sheen in the eye of the public because now it is being seen as the High Priest of corruption. Whether Lalit Modi will be back as the commissioner or shall the will of the BBCI prevail, IPL is no longer as shining a proposition as it used to be. The powers that be have violated the trust of the public.
IPL is a great example for brands not to emulate. If you wish to win the trust of your consumer, integrity and transparency are the order of the day. This brings to mind a meeting my sales team had with a leading financial services company, a few years ago. We were in the final stages of negotiating a deal with this company, when we received a counter-offer from them. “Delete all our negative reviews,” and for this they had offered us, hold your breath, tons of money. Thanks but no thanks.
(Faisal Farooqui is the Founder-CEO of MouthShut.com, a leading product review and social media website)