Pension reforms 2023

Government’s annual pension bill includes increasing number of pensioners.

In the case of the federal government, pension is a defined benefit currently admissible to the entitled employees and their families. In view of the rising pension burden on the exchequer, the federal government had long been contemplating reforms to cut down on its expenses. And now the Centre has finally started implementing — albeit in a piecemeal manner — the pension reforms as the country’s pension liabilities spike by a hefty 44.4% — from the original estimate of Rs520 billion for the ongoing fiscal year to Rs751 billion for the coming one. While little to no heed was paid to this problem over the years, the pension bill kept on ballooning year after year. Over the last 12 years, the pension budget allocation has gone up by 500% exclusive of provincial pensions.

The government’s annual pension bill includes the increasing number of pensioners — something that is also emerging as a threat to the country’s fiscal sustainability. The Pay and Pension Commissions have been invariably headed by retired professionals from various government organisations and departments. While already availing pension, they are re-employed on hefty salaries. It is surprising that they are not practising what they are preaching. Also, there are scores of retired professionals from a certain government department who head various organisations after retirement and enjoy both high perks as well as pensions. There is thus the need to follow recommendation on multiple pensions.

On top of that, despite tall claims of providing relief to the poor and rounding up the rich, the government has failed to do so with in case of its own employees. With a flat 17.5% increment, the pension for 17-22 grade officers would increase at a much higher rate. Not to mention that the compound effect of these increments takes the pensions of some of the retired officers to an unusually high level.

Pensions for retired government employees are a universal phenomenon and each country has its own rules and regulations. Most of the people join government service because besides job security, it is pensionable.

Moreover, every government employee who dies while on duty is a shaheed. Here this title is not confined to only those who fight or wear uniform. This is a wrong concept of martyrdom. There is need to enforce amendment regarding people falling in this category. While the case of shuhada and Army personnel is still catered for, war-wounded individuals or employees who go through similar trauma are denied such an entitlement. It is truly heartbreaking to witness someone’s career turn to nothing due to an injury or an illness which stops them from working. Such cases do deserve relief in the form of pension.

Also, family pension should not be restricted to 10 years only, as there might be people, like the widow or a dependent daughter, relying on the pension alone. Lifetime pension policy should not just be confined to a special child or a disabled one. It should be for a lifetime regardless of the conditions provided in the amendment column. For a widow, with children or without, it is hard to sustain with the pension stopping after 10 years.

In order to control the ever-growing national liability of pension, it is high time for our government to follow the rest of the world and adopt contributory pension scheme. Such a scheme is a good way of dealing with the uncontrollable pension burden. Under this scheme, the amount an employee receives on retirement depends upon how much they had put in over the course of their job and how much that amount had grown. The pension pot is built from the contribution of the employee and that of the employer (if applicable) plus return on investment and tax relief. This saves a good amount on retirement and gives an opportunity to start over with new things.

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