Bank staff unions are set to raise the demand for the restoration of the Old Pension Scheme (OPS) in their upcoming meeting with the Indian Banks’ Association (IBA). This move comes shortly after the central government announced the Unified Pension Scheme (UPS) for its employees, effective from April 1, 2025.
The OPS issue has gained traction following the central government’s decision, which is expected to influence the pension policies of bank managements. The OPS, which does not require employee contributions, is being pushed as a crucial social security benefit by bank unions. Currently, the pension fund of banks does not cover employees recruited on or after April 1, 2010, as they are part of the National Pension Scheme (NPS), regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
Employees who joined banks before April 2010 are eligible for the bank pension scheme, which calculates the pension as 50 percent of the average basic pay over the last 10 months of service. As the UPS is seen as an improvement over the NPS, bank unions are assessing its implications to determine its proximity to the OPS. The final stance of banking sector unions will be shaped after a detailed examination of the UPS.
Concerns over pension updation
Retired officers and workmen from public sector banks are concerned about the lack of action on the “provision for pension updation,” an issue that has remained unresolved for 30 years despite an agreement that included enabling provisions. In contrast, the Reserve Bank of India (RBI) revised its pension scheme for retirees, as evidenced by circulars issued on March 7, 2019, and July 13, 2023.
The central government, however, has clarified that there is no provision for updating the pensions of commercial bank employees. On July 31, 2023, Bhagwat Karad, the Minister of State for Finance, stated in the Lok Sabha that the pension scheme for these employees, which was introduced through a bipartite settlement on October 29, 1993, covers those who retired on or after January 1, 1986. This scheme was established through agreements between the unions/associations of employees and the Indian Banks’ Association (IBA), the national body authorized to sign settlements with the United Forum of Bank Unions (UFBU).
