Pension reforms; too little too late

CHITRAL: Finance minister while announcing pension reforms in the National Assembly said officials were getting as much as three different pensions from different organizations. He also said that spouse and other dependents were getting life long pension of the deceased for unlimited time.

These are such horrifying revelations that it is surprising how Pakistan is surviving with such spiraling burden of pensions on the government exchequer. No where in the world would there be such impracticable and inefficient pension scheme as has been practiced in Pakistan since inception.

The current state of affairs of the country is such that the pension budget of both civil government and armed forces personnel put together far exceeds any other budget -even the much bloated defense budget.

We have come to a stage of bankruptcy due to many reasons, major being these unrealistic overhead expenditures which have an inherent discrepancy of snowball effect.

What needs to be done and should have been done is to rationalize the pension system without jeopardizing the right of the pensioner. The pension scheme followed in the corporate world, private institutions and NGOs etc, is that lump some pension is handed over to the pensioner at the time of retirement known as a ‘golden handshake’ and it is upto him/her how they decide to use that money. If they want monthly payments they can keep the money in National Saving Schemes, banks etc and get paid monthly as they are used to in existing monthly pension system.

The caveat in this model is the huge amount of lump some money required initially to change to such a model. Money can be borrowed for this purpose from the IMF etc, but the recurring payments  and snowballing of pension expenditures with passage of time which are grotesque, will come to a halt once for all.

New situations and new compulsions of the time demand new and efficient management of the economy and restructuring the pension system should take the top priority in this restructuring. .. CN report, 28 June 2023.

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