AIBRF ON RECOVERY PERIOD OF COMMUTATION

[MOHAN P]

The Office Bearers/ Central Committee Members

A.I.B.R.F

Dear Sir

                          Re; Recovery Period of Commuted Value

As you are aware , WP has been filed in Punjab & Haryana High Court on recovery period of commuted value of basic pension by the pensioner from 

government sector. Pending hearing on WP, the court has granted stay on recovery of the commuted value to petitioners  who have already paid monthly

instalment for 10 years or more. 

2. AIBRF has already written to IBA/ DFS to ask banks not to recover the amount in eligible cases (10 years or more) in view of the above order of the court.

3. Now news is under circulation in the social media  that retirees of many banks have also been granted stay on recovery by the  Punjab & Haryana Court. According to these WhatsApp 

message, 28 Retirees of Union Bank of India, 49 of PNB, 140 of BOB, 94 of P& S bank have been granted stay on recovery by the court. 

4. To ascertain authenticity of above messages, we are traying to collect relevant orders of the court.  Legal Committee of AIBRF is also examining the point whether

AIBRF should move application in the court to obtain stay for eligible pensioners and it is legally possible. 

5. In the meantime, We request office bearers and central committee members to collect the following data from members and share with us to enable us to examine and decide whether

 it is strong legal case or not

  (a) Amount of Commutated value received at the time of retirement

  (b) Amount of reduction in basic pension per month for 180 months 

  (c ) Excess Amount payable by pensioners by way of interest.

7. Following is  one example

    (A) Amount of Basic Pension                  Rs. 12000

    (B) Age of  Retirement                                  60 years

     (c) Factor for commutation  at 61                 9.81

    (d) Amount of commuted vale

        4000x 12x 9.81                                     Rs. 470880

    (e) Recovery  4000x 180                          Rs. 720000

    (f) Excess Amount paid                             Rs. 249120

     (g)  Percentage                                            52.90

     (h) Annualized Percentage                             3.52

8. AIBRF  will take all possible steps to protect interest of retirees. But  the decisions and proposed action will be based on authentic documents and data.

9. If any office bearers/ central committee members are holding court orders granting stay to bank retirees they are requested to share with Central Office

Regards

S. C. JAIN

GS AIBRF

[Sadhan Bhattacharyya]

Very good news and progressive step by the association. My hearty gratitude to you all.

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[JSOMA SHEKARA]

Every pension agreement comes with built in anomalies.

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[yogendra singhal]

Court order is applicable  to all retirees  who have completed  commutation recovery period of 10 years.

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[Ramasubramanian V]

In the example given in point 7 above, percentage (52.90) of excess amount returned (2,49,120/-) as against commutation amount received (4,70,880/-) by the pensioner and accordingly annualized percentage (52.90 / 15 = 3.52) is calculated on simple basis.

I surmise that commutation received is a lumpsum payment representing net present value (NPV) of amount payable over 15 future years, discounted by the rate of interest prevailing at the time of commutation. I am not very sure what other parameters / variables go into arriving at the commutation factor, but apparently age at the time of commutation is a relevant parameter.

If calculations are made accordingly,  the annualized rate of return will be altogether different.

Anyone interested to know more about NPV can always google search sites where such details are given.

Ramasubramanian V