Former UTI employees may move court to recover pension dues
UTI Asset Management Company (AMC) is yet to resolve the impasse surrounding pension dues of former employees who had opted for voluntary retirement in 2003, as well as pension and other long-pending grievances of its serving officers.
The matter assumes significance because these liabilities could impact valuations ahead of a possible IPO.
A few months ago, the All India UTI AMC Officers’ Association had sent a letter to the Securities and Exchange Board of India (Sebi), alleging that the draft prospectus of the planned IPO failed to highlight the contingent liabilities arising out of employee-related dues.
“The UTI AMC management has delayed implementation of the decisions of this critical report, so as to suppress the huge liability arising out of the settlement of longpending issues, and also to camouflage and present a better financial statement to prospective investors, which is unfair and misleading… the management and the board are in a hurry to push the IPO at a high price, suppressing large liabilities,” the letter had observed.
These liabilities could amount to ~1,000 crore, with a bulk of it arising out of pension dues to 1,200-odd former employees. It is not clear whether this information will be incorporated in the red herring prospectus. An email sent to UTI MF did not elicit a response.
The UTI Retired and VSS Employees Social Association (UTIRAVESA), together with the Officers’ Association, plans to file another writ petition before the Bombay High Court (HC) if corrective measures are not taken.
“The information on employee-related dues as well as liabilities has to be disclosed in the prospectus to ensure investors do a fair evaluation,” said a member of the retired association.
He added that any decision on the quantum of pay, allowances, and benefits pertaining to demands made by the Officers’ Association, or regarding pension to former employees made after the IPO would be unfair to investors because these payouts would impact the balance sheet. “The retiree association has a pension issue still lying before the HC. Who will pay for the liability in case we win the case?” he asked.
The Centre had, a few months back, filed an affidavit stating it was not party to the dispute. This could put the onus on UTI AMC to foot the entire pension bill.
In January 2019, the finance ministry — through the Department of Investment and Public Asset Management — had asked UTI AMC to address all pending grievances and ensure the entitlements of officers (of erstwhile UTI) were pro - tected under Section 6 (1) of the UTI Repeal Act 2002.
According to Unit Trust of India Pension Regulations, 1994, pension will be payable to all full-time and part-time employees (exceeding 13 hours per week) who have completed 10 years of service.
UTIRAVESA has filed two writ petitions before the HC, demanding the opportunity to exercise options to avail of the pension.
The Officers’ Association has also filed a writ petition seeking restoration of the retirement age to 60 years.
The erstwhile UTI had offered VRS i n 2003 for employees completing 10 years of service. It had constituted a staff welfare fund, which became part of SUUTI after the former split into two entities.