Apex court’s ruling in favour of pensioners to cost NBP Rs48bnArchive
KARACHI: A decision by the Supreme Court in favour of the pensioners of National Bank of Pakistan (NBP) on Monday will cost the bank approximately Rs47.7 billion.
NBP said in a stock notice the Supreme Court dismissed its multiple civil appeals in pension-related cases filed by some of its retired employees and maintained the judgment of the Lahore High Court.
Moreover, the court allowed another appeal by setting aside the judgment of the Peshawar High Court, which is also against NBP, it said.
“The implementation of the decision... will have financial impact. The bank is considering exercising legal options available to safeguard its interests,” NBP said in the notice.
Speaking to Dawn, NBP President Saeed Ahmad said the bank may file a review petition in the Supreme Court. “But we are waiting for the detailed decision,” Mr Ahmad said.
“We will have to see how much funds will be needed for retired employees, in-service employees, and future funding,” he said.
“It can have implications for the entire financial industry if other banks are also told to pay pensioners as per the decision of the Supreme Court. This is why we need (to wait for) the detailed decision,” Mr Ahmed added.
CEO says the bank may file a review petition after getting detailed verdict
“In case the matter is decided unfavourably, as per the advice of actuaries, the bank might have a financial impact of Rs47.7bn approximately as on December 31, 2016,” NBP said in its annual report for 2016.
In 1977, the federal government directed that all executives and officers of nationalised banks would be paid pension at the rate of 70 per cent of average emoluments on completion of 30 years of qualifying services and where qualifying services were not less than 10 years. The pension scheme was made applicable with effect from May 1, 1977.
In 1997, Banks Nationalisation Act 1974 was substantially amended, the Pakistan Banking Council was dissolved and boards of directors of the nationalised banks were empowered or mandated to determine personnel policies with the bank president deciding the remuneration and benefits of employees in accordance with policies determined by the board.
In 1999, the NBP board of the directors approved the revised pay structure for officers and executives of the bank with effect from January 1, 1999, whereby the basic salary was increased from 110pc to 140pc. Besides multifarious benefits to its employees, the new pay structure also revised the formula for monthly gross pension.
A number of bank employees, after attaining the age of superannuation, filed writ petitions before Lahore and Peshawar high courts for the re-calculation of their pension benefits and increase in accordance with the bank’s circular dated Dec 26, 1977.
Furthermore, they sought a pension hike as per the increases allowed by the federal government to its employees. This litigation started in 2010 and 2011.
The Peshawar High Court dismissed the petition on June 3, 2014, while observing that the petitioners could not claim the benefits granted to the similarly placed employees of other institutions who were governed through different statutes and service rules. The said order has been assailed by pensioners before the Supreme Court.
The Lahore High Court through its judgment on Jan 15, 2016 directed the bank to release pension benefits of the petitioners. The said order was assailed by the bank by filing intra-court appeals in January 2016, which were dismissed by the Lahore High Court through its judgment on Jan 16.
Published in Dawn, September 26th, 2017