The Union government has approved new wage and pension terms for staff and retirees of major financial institutions, ending a long wait for thousands of employees.
The decision covers public sector general insurance companies, the Reserve Bank of India (RBI), and the National Bank for Agriculture and Rural Development (NABARD). Most of the changes take effect from 2022 and include substantial arrears.
Officials said the revisions are aimed at easing pressure from rising living costs and strengthening post-retirement security for employees who have spent their careers in public institutions.
What changes for insurers, NABARD staff and pensioners
For public sector general insurance companies, wages of over 43,000 employees will be revised from August 1, 2022. A 14 per cent increase in basic pay and dearness allowance results in an overall wage bill increase of 12.41 per cent.
The government has also raised its contribution to the National Pension System from 10 per cent to 14 per cent for employees who joined after April 1, 2010.
Family pensioners have been included as well. Around 14,600 family pensioners will receive a 30 per cent increase in family pension. This will come into effect once the decision is notified in the official gazette.
The total cost of these changes for public sector insurers is estimated at Rs 8,170.30 crore.
At NABARD, pay and allowances for around 3,800 serving and retired employees across Groups A, B and C will be revised by about 20 per cent, effective November 1, 2022. Pension revision has also been approved for employees who joined and retired before November 1, 2017, bringing their benefits in line with a set of RBI-linked retirees.
The pay revision is expected to add about Rs 170 crore annually to NABARD’s wage bill, with arrears of roughly Rs 510 crore. Pension arrears will require a one-time payout of Rs 50.82 crore, along with a monthly increase of Rs 3.55 crore for pensioners and family pensioners.
RBI pensioners to receive higher payouts
Retired employees of the RBI will also see an increase in their pensions. The government has approved a 10 per cent rise on basic pension plus dearness relief, effective from November 1, 2022.
This revision raises the basic pension by a factor of 1.43. More than 30,000 beneficiaries, including pensioners and family pensioners, are covered.
The financial impact of the RBI pension revision is estimated at Rs 2,696.82 crore. This includes Rs 2,485.02 crore towards arrears and Rs 211.80 crore as recurring annual expenditure.
A government spokesperson said, “These measures demonstrate the government’s steadfast commitment to the social security and financial well-being of employees and pensioners in the financial sector. By enhancing wages and pensions, we aim to ensure that these individuals can maintain a dignified standard of living while continuing to contribute to the country’s inclusive and sustainable economic growth.”
In all, more than 46,000 employees, over 23,000 pensioners and a similar number of family pensioners are expected to benefit from the decision.