How to reduce the pension bill of Pakistan.

 To improve the economic condition of Pakistan by reducing pension expenses.

 

 

Encyclopedia Britannica defines pension as a series of periodic money payments made to a person who retires from employment because of age, disability, or the completion of an agreed span of service. The payments generally continue for the remainder of the natural life of the recipient, and sometimes to a widow or other survivor. 

 

Senior citizens, after retirement, need pension payments as income support. Normally the completed years of service determine the amount of pension to be paid to the concerned employee. When an employee dies during service or after retirement, the family members are eligible for pension benefits at 75% of the net pension.

 

A commutation option is also available to pensioners at 35% of the gross pension, which is to be paid in a lump sum at the time of retirement. This commutation is calculated as per the commutation table published by Government.

 

There are so many heads of expenditure at the Government level but major heads are Interest charges payable on loans, Defence services, expenses for running Civil Government and Pension payments. Pension expenses in the Public sector have rapidly risen over the last decade.  Pension payments are recorded as more than Rs. 500. Billion, out of that military pension stands at 75% and the remaining 25% is a pension for civilian employees.

 

There are several ways that the pension bill in Pakistan could potentially be reduced:

·       Reform the pension system: One option could be to reform the pension system in order to make it more sustainable and cost-effective. This could involve adjusting benefit levels, increasing the retirement age, or implementing other changes to the system.

·       Increase contributions: Another option could be to increase the contributions that workers and employers make to the pension system. This could help to ensure that there are sufficient funds available to cover the cost of pensions.

·       Improve efficiency: Improving the efficiency of the pension system, for example by streamlining administration and reducing fraud and waste, could also help to reduce costs.

·       Encourage private pensions: Encouraging people to supplement their government pension with private pension plans could also help to reduce the burden on the government pension system.

·       Address economic factors: Finally, addressing economic factors such as inflation and interest rates could also help to reduce the cost of pensions. For example, if inflation is high, this can erode the purchasing power of pensions over time, which could be addressed by increasing the value of pensions to keep pace with inflation.

 

 

There are so many clauses inserted in pension rules which may be struck down immediately to reduce the pension bill. Some of the examples are given below:-

 

·       The Sister has never been a family member of a government employee, but it is mentioned in pension rules that, if there is no other member eligible, the sister/widowed sister is entitled to a survivor pension.

 

·       When a daughter of an employee marries, she is no more a member of the family of the employee as mentioned in TA Rules and Medical Attendance Rules. But in pension rules, the widowed daughter is also eligible for the Pensioner’s benefits.

 

·       The second pension is allowed to persons retired from military services, for their services rendered in civilian (Government) departments. Normally military person from sepoy up to Major retires under the age group of 30 to 45 and they receive a pension for long years from the defence budget with benefits like medical etc. Hence retired military persons may only be given a contract-based appointment in civilian departments.

 

·       In some cases, after the death of an employee, his widow is appointed in the department. That means she will be drawing a pension besides a salary.