Payment of Pension

Union Bank of India (Employees’) Pension was adopted by the Board in September 1995.

• Pension is voluntary to employees joined the bank before 29.09.1995 and compulsory to those employees who joined from 29.09.1995 to 31.03.2010.
• Average of B.P., PQP, SP. Pay, FPP (Basic portion) and officiating allowance (if any) as per rules, for the last 10 months are taken into account while calculating pension.
• Full pension is granted to employees who have put in 33 years of qualifying service

PENSION CALCULATIONS

AGE OF THE PENSIONER: in case of pension, the average salary of last 10 months shall be considered.

Case A): 40 yrs.    Case b): 55 yrs.    Case C): 60yrs.

CASE A): NOT ELIGIBLE FOR PENSION, SINCE LESS THAN 12 YEARS.

Case B): Average pensionable pay i.e., Basic + FPP+PQA + Other allowances eligible forPF x no. of yrs. of service + additional service (Max 5 yrs.) if not completed 33 years of actual service, provided still having left over service of 5 yrs. or more) / 2 x 33. - Basic Pension is = 30000+600+750 x (26 + 5)/ 2*33 =14725. Commuted portion = 14725/3 = 4908.
- Reduced Basic Pension = 14725 –4908 = 9817.
- Commutation amount: 4908 x 12x commutation factor i.e., 11.42 (since already he had completed 55 yrs. of age, hence the factor of next birthday i.e., 56 yrs. has been taken) =672592.
- Commuted portion will be restored after 15 yrs. from the date of commutation.
IMP.Point: if the commutation is done within 1 yr. from the date of retirement, then thepension can be commuted without medical certificate. Otherwise, pensioner has to undergo medical examination and the age will be taken for commutation factor as per the doctor’s certificate.

CASE C): (30000+600+750) x 33 /2*33 =15675. i.e., Basic Pension is 50% of pensionablepay.
Though he had completed 36 yrs. of service, the max. service to be considered for pension will be 33 yrs. only.
Commuted portion: 15675/3=5225. Commutation amount: 5225 x 12x9.81= 615087.

Another example, say one’s age is 53 yrs & commutation will be as under Basic Pension: (30000+600+750) X (30+ 3) / 2*33 = 15675. Commutation amount = 5225 x12x12.05 = 755535.
The commutation amount is more in this case as compared eligible for full pension and the survival chances are more, hence the commutation amount is more.

• Commute upto a maximum of 1/3^rd of Basic Pension at any time.
• In case the commutation is requested after one year of cessation of service medical examination is compulsory.
• The amount payable on commutation is (Commuted Basic Pension X 12 X Commutation Value).
• Commutation value for different value for different age from 17 to 85 years.
• For ready reference for age group from 55 to 64 years is given below.

• Commutation amount is fully exempt from INCOME TAX.
• A Pensioner will get total pension equal to residual basic pension (Basic Pension minus commuted portion) + DA on basic pension before commutation.
• Commuted portion of pension will be restored after 180 months from the date of commutation.

Family Pension

• Family Pension is paid to the dependent of the employee / Pensioner.
• Family Pension is 15% to 30% of the last basic pay drawn by the employee/pensioner as per various B. P. settlement / salary revision, subject to minimum and maximum family pension as per pension regulation.
• Enhanced family pension is double the family pension. The same is paid up to 7 years from the date of death of employee/pensioner or 65 years of age of the employee/pensioner, who expired, whichever is earlier.
• In case of children, family pension is paid up to the age of 25 years or employment or marriage (in case of female children) whichever is earlier.
• Differently abled children are entitled for lifelong family pension provided they are not gainfully employed.

Tax Liability

PF                          - No Tax

Pension                   - Taxable

Commutation          – No Tax

PL Encashment       - 3 Lakhs

Gratuity                  - No Tax upto 20 Lakhs

PL Encashment

• Maximum 240 days of PL can be encashed. The pro-rata PL earned during the year till the date of retirement is to be credited to the PL account. Payments are made at the Branch/Office where the employee has retired from service.
• Encashment of privilege leave on retirement is exempt from tax up to a maximum of Rs.3,00,000/-.

Gratuity

At a Glance overview of Gratuity Fund Rules and calculation formula.

• With effect from 23.03.2018 maximum amount of Gratuity payable is increased to Rs.20 lakhs under Gratuity Act.
• Every employee, shall be eligible for gratuity on Retirement
• The amount of gratuity payable to an Officer shall be one month’s pay for every completed year of service, subject to a maximum of 15 month’s pay.
• Provided that where an Officer has completed more than 30 years of service, he shall be eligible by way of gratuity for an additional amount at the rate of one half of a month’s pay for each completed year of service beyond 30 years.

As per Bank's Rule:

• One month pay for each completed year of service–max. 15 months’ paymonth pay for each year beyond 30 years of service.
• PAY MEANS: Average of Basic Pay + Special Pay+ PQP + Increment Portion of FPPOf Last 12 Months:

EXAMPLE

• 10 YEARS = 10 MONTHS PAY.
• 15 YEARS 15 MONTHS PAY.
• 20 YRS. /30 YRS. =15 MONTHS PAY.
• 32 YEARS = 15 + ½ + ½ = 16 MONTHS PAY.
• 40 YEARS = 15 + ½ X10= 20 MONTHS PAY

As per Gratuity Rule:

• PAY MEANS: BASIC PAY + PQP + SPECIAL PAY + DA + FPP (Increment +DA)
• Amount of Gratuity: (Last Drawn Basic + FPP + PQA if any+ DA) X 15 X No. of years of Service/ 26 (no. of days in a month, excl. Sundays.)

ILLUSTRATION-1

‘A’ joined the bank on 14.11.1983 and retired from the service of the Bank on 30.09.2020.His total length of service is 36 years 10 months and 17 days. For Calculation of Gratuity, service of 37 years will be taken. At the time of his retirement, he was drawing monthly emolument comprising of Substantive Pay (excluding officiating pay in case of an employee in officer cadre) and Dearness Allowance aggregating to Rs. 199322/-. Keeping in view the Supreme Court decisions and the modifications in the Payment of Gratuity Act, gratuity payable to him shall be calculated as under;

• Basic Pay = Rs. 111100.00
• FPP: = Rs. 2120.00
• Total Substantive Pay: = Rs. 113220.00
• Dearness Allowance = Rs. 86102.00
• Monthly wages (Substantive Pay + DA) = Rs.199322/-
• Wage per day = Rs.199322 / 26 = Rs.7666.23
• Wages for 15 days = Rs.7666.23 x 15 = Rs.114993.45

Amount of gratuity payable shall be Rs.114993.45 x37 = Rs.42,54,758 for 37 years of service. As the maximum amount of gratuity payable as per the Gratuity Act is Rupees Twenty Lakhs, the Gratuity payable under the Gratuity Act, to the above employee shall be Rs.20 lakhs.

Death Relief Fund

• Enhancement of financial assistance by way of ex-gratia amounting to Rs.4.50 lacs to the member’s nominee in the event service in the bank or to the member in the event of that member becoming physically handicapped due to serious illness, accident or otherwise resulting in loss to employment. (Staff circular 6869 dated 29.10.2018)
• Subscription towards DRF is Rs.125/ PM

Important Contact Numbers

UBI STAFF PENSION CELL Contact Details