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New Delhi: One Rank, One Pension (OROP), a scheme that was a long-standing lawsuit for armed forces veterans where everyone who retired in the same rank will get the same pension regardless of retirement date, is in the works for retired PSU bank employees.
The government has shown its intention to update the pension scheme, as those who retired in the 1990s get a fraction of the pension that a recently retired employee receives. This is because your pension is tied to your last earned basic salary, which was capped at Rs 10,000 in the 1990s. To eliminate this difference, banks must update their pension plan.
According to a report by Times of India, Finance Minister Nirmala Sitharaman has sounded out of the banks to do more for employees who retired earlier so that they are not discriminated against in terms of pension. The government has also asked banks to review the family pension scheme so that the spouse’s pension is the same as the government’s.
The family pension scheme is likely to be announced today when the Indian Banks Association (IBA) unveils the 11th bipartisan salary agreement. This expired from November 2017 and, although the MOU was signed in July, the agreement was slow to materialize. Today, banks have a family pension plan, but it is a truncated version of what is available to other government employees.
Banks will have to assume an initial cost to renew the family pension plan, as they must maintain funds to meet the future pension liability and this provision requirement continues to increase as interest rates fall and life expectancy increases. without any change in the pension plan. Therefore, an increase in future liabilities could result in a one-time strong increase in the provision for the pension liability.
During his interaction with banks at the 73rd annual general meeting of the IBA on Tuesday, Sitharaman spoke outside the banks about the need to treat pensioners fairly. The annual meeting was attended by heads of banks, including IBA President Rajkiran Rai. According to the ToI report, bankers have said that the health of the industry was better than expected. At the meeting, Sitharaman appreciated the work done by bankers during the Covid pandemic and recognized the role of every banker and business correspondent.
He called on banks to ensure that no Indian is left behind and that all disadvantaged citizens have a bank account linked to Aadhaar where they can receive benefits from the government. The finance minister also urged banks to make digital banking services available to all Indians and urged lenders to issue RuPay cards and try to get all Indians to have one.
