Federal employees: Govt to amend rules to invest surplus contributions

ISLAMABAD: The federal government has decided to amend rules to invest surplus contributions of federal employees in different schemes, official sources told Business Recorder.

The scheme of Federal Employees Benevolent and Group Insurance Funds (FEB&GIF) was introduced in 1969, through promulgation of Federal Employees Benevolent Fund and Group Insurance Act, 1969. This is a welfare fund, governed by a Board of Trustees (BOT) which is headed by Establishment Secretary. The prime objectives of launching the scheme is to provide financial assistance to the widows/orphan of Federal Government employees including civilians paid out of defense estimates and of specified autonomous bodies.

The funds are generated through contributions of the employees and receipts of the investments. After meeting the defined benefits, the surplus funds are invested in different permissible investment avenues under Section 7(0 of the FEBF & GI Act, 1969, are as follows 1(f) "To invest moneys held in the Benevolent Fund in Government securities and units of Investment Corporation of Pakistan or National Investment Trust, in the construction of buildings for purposes of raising rent income, and in other profitable ventures the plans whereof having been previously approved by the Federal Government."

Finance Division permitted the public sector entities which are holding trust funds such as pension, benevolent or insurance funds, to devise their investment policies through their own Boards. Accordingly, FEB&G1F with the approval of BOT and in consultation with Finance Division, approved Terms of Reference (ToRs) of its Investment Committee in 2004. Some additions/ changes were also approved by the BOT, being the competent forum as per Finance Division's policy.

As per directions of BOT, FEB&GIF proposed revised ToRs of the Investment Committee/Investment Parameters as approved plans under section 7 (f) of the FEBF&Act, 1969, incorporating different requirements and analysis of financial ratios for investing in the non-government securities, instead of merely depending on reports of the credit rating agencies, and which would be helpful in avoiding any weak investment decision.

The ToRs of the Investment Committee/ Investment Parameters have been concurred by the Finance Division. The revised ToRs were also forwarded to Law and Justice Division for vetting. However, Law Division returned the ToRs un-vetted with the following remarks:- "Under clause(c) of sub-rule(1) of the Rules of Business, 1973, the Law and Justice Division shall be consulted before the issuance of or authorization of the issuance of any rules, regulations, bye-laws, notifications, orders, etc. in exercise of statutory powers. But the proposed ToRs are not statutory, hence are returned un-vetted".

The issue will be taken up by the federal cabinet. Prime Minister, Imran Khan has already directed the Finance Ministry to find ways to invest employees contributions as burden of pension has become unsustainable.

Copyright Business Recorder, 2020