Wage disparity, particularly the long freeze on pensions, can taint the image of the otherwise sound and profitable domestic banking sector.

This reflects growing public awareness, at home and abroad, of the need for businesses to be socially compliant.

In response to concern expressed by President Mamnoon Hussain over the plight of bank retirees, the ministry of finance has advised the State Bank to look into the matter of revising pensions in private banks, frozen for the last two decades.


A probe into the post-retirement conditions of bank employees brought some shocking facts to light


No one in the relevant circles in Islamabad and Karachi was ready to verify or reject the information gathered by this writer from banking sources.

A probe into the post-retirement conditions of bank employees brought some shocking facts to light. There are thousands of retired employees being treated unfairly by banks, receiving a monthly pension not enough to sustain them for even two days.

Four out of five of the biggest banks have pension schemes that cover at least some of their former employees. MCB switched to a one time severance package (provident fund scheme) to contain long-term liability when it was privatised two and a half decades back. The National Bank of Pakistan — a public sector entity — did periodically revise its pension plan and its retirees fared better than others.

NBP caters to about 80pc of all bank pensioners while the remaining 20pc are left at the mercy of UBL, HBL and ABL. Some retired former officers told Dawn that they had no option but to accept the injustice as their fate.

“I am too old to haggle now. Immediately after retirement I did try to fight my case but all the running around proved to be futile”, Asif Ali, a seventy eight year old frail man told Dawn. He joined the bank as key punch operator (KPO) in 1976 and retired in Grade 2 in 1998. He said his pension was, at that time, fixed at Rs1,200 and that he is still drawing the same amount.

The average pension of a government employee who retired in 1998 in Grade 17, after equal number of years in service, is about Rs45,000 today, an officer in AG office in Islamabad told Dawn.

“Can there be a defence for paying Rs1,000 per month as pension to people who retired in an officer grade after serving the bank for decades, when the same bank can afford to pay Rs10,000,000 ($90,000) monthly to members of its executive team?”, a UBL employee who did not wish to be named for obvious reasons asked when discussing pay and pension packages.

Several unsuccessful attempts were made to approach the top executives of the relevant banks, including company secretaries, to ascertain their position on the issue.

Munir Kamal, chairman, National Bank of Pakistan and Pakistan Stock Exchange, agreed that the pensions were unfair but opposed the idea of regulator intervention in a private bank’s human management policies.

“All banks have very capable board of directors who take policy decisions based on strategy. The role of the State Bank should be focused on more vital issues such as lending practices, capital adequacy, depositors protection etc.”, he said over the phone sidelining the issue of forgotten people who worked all their life and now get a paltry pension.

When approached, the regulator of the banking sector, the SBP, forwarded the website link to guidelines of its banking policy and regulation department (BPRD). Beside broad guidelines there was a circular dated March 2, 2016 circulated to banks titled ‘guidelines and disclosures on governance and remuneration practices’.

The guidelines and circular were geared more towards persuading banks’ management not to pocket bank resources in cash and kind and ensure decent salaries for employees based on performance. The focus is on transparency of accounts and orderly disclosures.

The press relation officer (PRO) of the SBP responding to written questions said the bank needs more than two days to state its formal position on the issue. Informally he said via mail, “the SBP does not interfere in such HR issues directly except for giving instructions to put in place policies and disclosures”. He also declined to share the total number of relatively fortunate NBP pensioners for some unexplained reason.

The post of the head of Employees’ Old Age Benefits Institution is vacant. Muhammad Riazuddin, Investment advisor/DG investments, confirmed to Dawn in his office last week that private banks did not entertain the demand note of EOBI and got stay orders from Sindh and Punjab High Courts. Some cases, he said, were still pending but he was not hopeful of a decision in favour of pensioners under the circumstances.

Anisul Husnain, Pakistan Banking Mohtasib, thought that the issue warranted the attention of the relevant regulator but it fell beyond the purview of his organisation that deals with disputes between customers and commercial banks and between banks.

“To avoid the dangerously uncertain course of disruptive justice the regulators and the government needs to address the systemic flaws in structure that serve to deepen inequality and enforce rules that make private companies socially responsible and promote an ethical corporate culture, instead of using CSR as a marketing stint,”, warned an analyst.

Published in Dawn, Business & Finance weekly, December 12th, 2016

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