ISLAMABAD: Prime Minister Imran Khan has said that the burden of pensions was fast becoming unsustainable, directing Finance Ministry to include eminent international experts in the Pay and Pension Committee to professionally evaluate the best available options.
An increase of 57 per cent has been witnessed in military pensions during the five years from 2016 -17 to 2020-21 whereas pension bill of civil employees increased by 48 per cent during this period.
At a recent meeting of federal cabinet, Secretary Finance Naveed Kamran Baloch gave a detailed presentation on pensions. He informed the cabinet that the total number of pensioners was 1,806,110, of which military’s was 1,452,717 and civilians’ 353,393.
According to Secretary Finance, expenditure on civil pensioners was Rs 75 billion in 2016-17 which increased to Rs 83 billion in 2017-18, Rs 100 billion in 2018-19, Rs 109 billion in 2019-20 and Rs 111 billion in 2020-21.
The expenditure of military pensioners was Rs 229 billion in 2016-17, Rs 83 billion in 2017-18, Rs 307 billion in 2018-19, Rs 339 billion in 2019-20 and Rs 359 billion in 2020-21.
He said the total expenditure on civil and military pensioners was Rs 334 billion in 2016-17, Rs 334 billion in 2017-18, Rs 407 billion in 2018-19, Rs 448 billion in 2019-20 and Rs 470 billion in 2020-21.
He said it was unsustainable as annual pension bill is increasing due to increase in rate of pension and increase in the number of pensioners.
Pension is non-contributory and non-funded whereas various allowances are also included in it.
Pension payments by autonomous bodies are additional contingent liabilities. There are also issues in pension disbursements including family pension.
The government constituted the Pay and Pension Commission in April 2020 which was given six months to make appropriate recommendations. One of its ToRs was to evaluate alternate systems of pension including setting up of pension funds. However, Covid-19 and resignation of the Chairman have delayed the process. Finance Division has requested the World Bank for technical assistance after concept’s clearance.
The World Bank has recommended establishment of Pension Fund. Finance Division submitted a concept paper to Concept Clearance Committee (CCC) of Planning Commission, which approved it.
Finance Division sent a request for funded/ unfunded TA to the World Bank in July 2020. Finance Division will prepare PC-1 including regulatory framework, benefit design, contribution rates, benefits liability age and investment in fund.
Secretary Finance said that Finance Division will also analyze: (i) funds market with a view to assessing availability of investment opportunities and projected returns; (ii) institutional framework and structure of regulatory institutions; (iii) inclusion and exclusion of policies/or decisions; (iv) required rules and regulations for various organizations employees and; (v) any other aspect necessary to complete the initiative.
Cabinet Division while updating the implementation status of previous Cabinet decisions informed that Ministry of Religious Affairs (MoRA) shared initial draft ordinance for creation of the Hajj Fund: and that the Finance Division has furnished advice/comments. Government employees pension Fund, Finance Division has got concept clearance from Planning Commission and referred the matter to World Bank through EAD for assistance.
Finance Division is consulting the Ministry of Human Resource Development & Overseas Pakistanis and EOBI for the creation of the Labour Provident/Pension Fund. Regarding Postal Pension Fund, a Committee under chairmanship of Advisor to PM on Finance & Revenue has been notified by Finance Division.
On March 10, 2002, Cabinet had decided that for facilitating the pensioners, Finance /AGPR would include NADRA's Biometric verification as an alternative to "proof of life "document for the pensioners. Cabinet Division informed that amendments in Federal Treasury Rules have been vetted by Law and Justice Division and is being submitted to the Cabinet Committee for Disposal of Legislative Cases (CCLC) for approval.
FD has held several meetings with relevant stakeholders to formulate a detailed action plan for both Civil and Military pensioner's conversion from pension books to bank accounts. The detailed action plan with timelines and responsibilities is as follows: (i) amendment in FTR 328 withdrawing PPO option by Finance Division/CGA by September 30, 2020; (ii) cancellation of all PPOs by AGPR October 31, 2020; (iii) SBP to facilitate pensioners banks by October 31, 2020;(iv) Pak Post/ NBP to return all PPOs by December 31, 2020; (v) awareness campaign by December 31, 2020; (vi) AGPR to get DCS forms filled by January 31, 2020 and; (vii) pensioner data entry SAP by January 31, 2021.
Action plan for Military Pension was as follows: (i) amendment in FTR 328 withdrawing PPO option by September 30, 2020;(ii) cancellation of all PPOs by Military Accountant General by October 31, 2020 ;(iii) SBP to facilitate pensioner bank account opening by October 31, 2020;(iv) Pak Post/ NBP to return all PPOs by December 31, 2020;(v) awareness campaign by MAG by December 31, 2020;(vi) MAG to get DCS forms filled by January 31, 2021;(vii) pensioners data entry in SAP by January 31, 2021 and ;(viii) liaison with services HQs/ DASB by December 31, 2021.
Secretary Finance further stated that the way forward was a follow-up with the World Bank, Pay and Pension Commission and approval for an action plan.
During discussion, it was pointed out that most public sector entities had illegally expended their Pension Funds and were now seeking government support to pay pensions to their employees . It was suggested that the forensic audit of the SOEs should look into this while the Minister warned of the possibility of irregularity.
The Prime Minister stressed that eminent international experts in the field should be hired and included in the Committee to professionally evaluate the best available options as the burden of pensions was fast becoming unsustainable. He directed Adviser to the Prime Minister on Finance & Revenue to present a concrete proposal with timelines in the cabinet meeting.
Copyright Business Recorder, 2020
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