Pension updation, Acturial Report & AS 15 compliance

[Narayanan Venkateshwaran]

 AS 15 norms are meant only for corporates in case they commit to DEFINED  PENSION  SCHEME. It will be rarest of rare  case as corporates never ever commit to long term obligation to the retired as their very existence itself is subject to  various vagaries. 

In the case of bank pensioners the scheme got introduced while under 100% control of Govt. and AS 15 was not of concern. Hence 

One might notice that the regulation speaks of Banks responsibilty to provide requisite fund every year after acturial exercise. Nowhere one could see covenant excluding periodical updation and AS15 compliance. 

The present impasse is of the sole making of govt who chose to partially own Banks by divestment. 

Have they not put themselves on porous ground legally by ditching the interest of poor pensioners without alternative. 

Let us assume the affirmative position of updation clause in 35(1) based on the valid inputs provided by  some of us  in court. 

Should we not thwart the attempts of govt to disown their obligation on the basis of inadequate fund? 

C V Narayanan

[MOHAN P]

Dear Shri Narayanan,

What you have stated is not correct.

AS-15 (Accounting Standard-15 on Employee Benefits) is not confined only to private corporates. It is applicable to banks also, including Public Sector Banks (PSBs).

The ICAI applicability criteria specifically include:

Banks (including co-operative banks)

Financial institutions

Insurance companies

Listed entities and other large enterprises 

Further, the RBI itself issued guidelines directing banks to comply with Accounting Standards including AS-15. 

Therefore:

Public Sector Banks are covered by AS-15

SBI and nationalised banks must account for pension, gratuity and other retirement liabilities under AS-15.

AS-15 governs accounting/provisioning

It requires actuarial valuation of employee benefits such as:

Pension

Gratuity

Leave encashment

Post-retirement medical benefits

It mainly affects how liabilities are shown in financial statements.

Funds position is not the basis for pension payment.It is bank's concern.Let actuaries decide it.Banks have to pay pension as per BEPR,1995 and shortage in fund cannot be a reason to withheld of pension.Once updation of pension happen, additional funds has to be provided by banks as done in the recent  past on enhancement of family pension etc.

Other aspect in 35(1) etc  is under legal scrutiny of SC under CA 7993/2023  though rejected earlier by KHC, and let us wait for the verdict.

Regards

Mohan.P

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[Narayanan Venkateshwaran]

Dear sri mohan

I stand corrected to the extent that AS  15 norms are not exempted for govt entities. But you will kindly agree in reality, it is more breached than practiced. Haven't we come across some of the state govts extending retirement age merely for the reason that their coffers are empty to meet the superannuation benefits.If my memory serves me right some years ago Central or state govt issued 5 /10 yr bond in lieu of down payment of retiral benefit. 

If Govt goes strictly on the spirit of AS 15,  updation is never to happen for us and we will be wandering as spirits. 

For your information Railways also have pension fund and they are reported to be not complying with As 15

It is evident that govt have other ideas up their sleeves with 12 existing banks and do not want unnecessary luggage. and pensioners are sacrificial goats. 

C V Narayanan

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[Ramani Konnayar]

I think, what Sri. Narayanan wants to convey is that, the Public Sector Banks, which were 100% owned by GOI when BEPR 1995 came into effect, could have very well been excluded from the purview of AS-15 norms or at least some relaxations could have been given so that they need not park so much monies in their Pension Funds, which phenomenon, now, appears to act as a

stumbling block for pension updation.

K N RAMANI  

On Thu, 7 May, 2026, 9:56 am MOHAN P, <moha...@gmail.com> wrote:

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[MOHAN P]

Dear Shri Narayanan,

Yes.It is true.Some of the state Govts are with helding dues to employees and retirees on paucity of funds despite budgetary allocation. AS-15 is not automatically or uniformly followed by Central/State Governments in the same way as corporates. Central Government ministries are not ordinarily audited for AS-15 compliance like a company.

In our case, as I have mentioned earlier, the above is not the ‘only’ cause for delay  in allowing updation of pension, and if that was the case banks would not have brought in additional substantial  fund in past years as per actuarial valuation  while such sanctions were made to pensioners/ family pensioners.Way out is there always.Not for exemption of norms.

On Governments issuing bonds instead of immediate retiral payment. This has happened in certain contexts in India, though not as a universal pension practice.

Indian Railways as a Government Department is not treated exactly like a company preparing Companies Act financial statements. Therefore, strict AS-15 style disclosure/compliance is not always applied in the same manner as in corporates or PSBs.

Pension updation too may happen. If not legally may be  through negotiations.

Regards

Mohan.P

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[Logu Kuppan]

Whether our M C Singhla case taken up or otherwise today 

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[Niranjan Cn]

Sir,  Please read any Annual Report of any bank - AS15 is mandatory and followed by Banks.  AS 15 will ensure continuity of payment of pension.  It is not in our interest against AS15.

Niranjan

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[Prasad C N]

Dear Shri Ramaniji,

Despite my relcutance, I am forced to indulge in correspondence.  During 1993, there was no AS-15 and it is introduced when GAAP is introduced. AS 15 and Pension Funds are existing and created in our interest.  The Banks do not derive any benefit out of Pension Fund, eventhough they are Banks' sinking Funds. Only Public Sector Banks have Pension Funds, but Private Sector Banks do not have Pension Funds and are mandated to buy annuities.  We understand that approximately RS.172/- is being paid for increase of monthly pension of Re.1/-.  

In case, we are responsible, we must seek more and more balance and provision to protect existing pension.  In fact, Four Officers Associations have demanded, after 11th Bipartite Settlement in a letter to Indian Banks Association to conduct Actuarial Valuation afresh and to make adequate provision.  That is what responsible organisations and leaders do. 

Thanks, a Million. 

With regards,

Prasad C N

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[Prasad C N]

Dear Shri Ramaniji,

One more important factor or information is not brought to your notice in earlier email.  Unlike payment of pension in Banks, pension of the Government is paid out of consolidated Fund or Budgetary Provision.  They are not paid out of Pension Fund.

Thanks, a Million. 

With regards,

Prasad C N

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