MEMORANDUM OF UNDERSTANDING OF 9.4.2007
by Narayan Singh Rathore
MEMORANDAM OF UNDERSTANDING ON ONGC SELF CONTRIBUTORY POST RETIREMENT AND DEATH IN SERVICE SUPERANNUATION BENEFIT SCHEME BETWEEN ONGC AND ASSOCIATION OF SCIENTIFIC AND TECHNICAL OFFICERS OF ONGC AT JEEVAN BHARTI BUILDING AT NEW DELHI ON 9TH APRIL 2007.
Short recital of case:
The Post Retirement Benefit Scheme ( hereinafter called the PRBS) has been in operation in ONGC since 01.04.1990. The representatives of employees, Association of Scientific and Technical Officers of ONGC (ASTO) and the Recognised Unions has been demanding review of the scheme in terms of provisions of earlier MOUs dated 03.02.1998 & 19.07.1998 and had shown their concern towards the sustainability and financial viability of the Scheme.
M/s. Mercer Human Resource Consulting ( MERCER) was appointed to study the financial strength of the PRBS and to recommend necessary changes for long term viability of the Scheme. Mercer in its report observed that the Fund is unable to sustain itself mainly due to increase in the purchase price of annuity and falling interest rates. There is large deficit in the fund which needs to be met.
Mercer recommended that PRBS can sustain as a defined pension scheme at the present LIC rates and discounting rate of 8% per annum with an increase in contribution, from members and / or direct contribution by ONGC.
The issue was deliberated and discussed in various meetings with ASTO and Recognised Unions of ONGC wherein it was opined that : -
(i). PRBS may be implemented in terms of earlier MOUs dated 03.02.1998 and
19.07.1998 as defined pension scheme without any modification.
(ii). All employees will agree for increased contribution & ONGC will also make its best endeavor to contribute to PRBS Scheme.
Terms of Agreement
3. Additional contribution received from ONGC shall be increased by 82% w.e.f. first day of the month of implementation with annual escalation of 10% and the same shall be wholly contributed by the employees to the PRBS Trust.
4. In addition, ONGC shall deposit some amount from the remaining part of the distributable profit of the past and not more than 40% of the distributable profit every year after payment of Additional annual incentive prospectively to the “Fund” as per the requirement of the Fund’s liability from time to time directly to PRBS Trust.
5. ONGC will contribute to PRBS taking into account various tax laws so as to get maximum tax advantage.
6. PRBS would be compulsorily applicable for all the employees w.e.f. 16.11.1995 for employees separating on or after date In view of above this memorandum of understanding is entered into between Management of ONGC and Association of Scientific and Technical Officers (ASTO) today on 09th April 2007 with the following terms of agreement:
1. PRBS benefit will be extended in term of MOUs dated 03.02.1998 and 19.07.1998 as “Defined Pension Scheme”. To this effect, the current Annuity Factor of 92.379 would be made dynamic to assure monthly pension restricted to 50% of “Last Drawn Notional Salary” to all the members.
2. Direct cash contribution of the members will be doubled from the present rates w.e.f. first day of the month of implementation.
7. The aforesaid changes would be implemented w.e.f. prospective date for employees separating on or after the date of implementation.
8. Necessary amendments to incorporate the agreed issues to the Rules of PRBS would be undertaken by the Board of Trustees of PRBS.
9. Necessary approval from Commissioner of Income Tax , Dehradun and any other authority would be taken ONGC.
10. All the terms, conditions, provisions of the Scheme and the Rules thereto as well as instructions/decision issued from time to time shall stand modified to the extent indicated above.
11. The Trustees shall arrange Actuarial Valuation of the assets and liabilities of “the Fund” and review of the scheme by an independent Actuary once in three years. Based on the periodic Actuarial Evaluation, ONGC and the employees are committed to provide necessary support to the “Trust” to ensure pensionary benefits to all the beneficiaries as per “Defined Pension Scheme” as modified vide this MOU.
12. The revised scheme shall be applicable to all employees based on this MOU. This MOU shall be rendered null & void if any of the clauses are modified at a later date without taking ASTO into confidence.
This understanding has been reached in good faith and in case of any doubt / ambiguity the interpretation of the Board of Trustees, PRBS Trust which consists of representatives of Management, Officers’ Association and recognized union shall be final and binding.
This agreement shall be used to seek approval of Chief Commissioner of Income Tax, Dehradun and any other approval required in this regard.
Management Representatives Representatives of ASTO
1. 3. 1. 3.
2. 4. 2.