With the growing debt burden day by day, when it seems too late finally Pakistan’s government decided to save the drowning ship that is Pakistan’s economic condition. On weighing scale between revenues and expenditures our economy has a lot on the side of expenditures, in the name of so many unnecessary programs which are also non-developmental and will bear no fruit for the country in the long run. Pension is one of those financial burdens for Pakistan’s drowning economy, for which now there is a solution in the funnel. Till now pensions were given as luxuries and not just necessities, they used to be passed on to the third-tier beneficiaries and kept on increasing every year on the basis of the last pension drawn. Furthermore, the candidate could also work at any private and public institute even after retirement from his/her service, resulting in two income streams.
Looking at this scenario going on since the very beginning of Pakistan, after 76 years of mistakes there are amendments on their way in pension scheme. These are not the complete solution but to some extent can control the damage. According to the amendment early retirement cases will have to forgo their 3% of pension every year till the time of their actual retirement, transfers of pension to the next tier will be limited to one tier, and that too for a limited period not for lifetime, in case of employment after retirement candidate will be eligible for either pension or the salary whichever suits him/her the best. All these amendments to some extent can control the pension burden of the country. In my view point, all these amendments should have been a part of the pension scheme a long ago, but better late than never. When a candidate/ employee is no longer serving the government they need to be taken care of, which can be done through providing a lump sum amount to afford a decent living of that time. About the 3% deduction of pension amount in case of early retirement in totally justifiable, as there is a cost for everything, and for every decision there are tradeoffs this applies to both cases that is early retirement and choosing to work somewhere else. For any economic activity both parties need to be at the same page neither will the employer bear any loss nor will the employee stick to the place while having better options elsewhere. In the process of career progression, the void that they create for employers is a lost efficiency for which they need to cover-up, and that cover-up is 3% pension deduction. The basic aim of pensions should be facilitating the vulnerable old age ex-employees, but if they are still able to secure a job and can work after 60 it’s their decision to make in which they are no longer vulnerable and thus are no longer eligible for pension grant when they can still earn for themselves.
About pension transfers to three tiers which are now conditional instead of unconditional which was earlier the case, it can save up a lot on account of pension and can also reduce dependencies which in the long run also create efficiency loss. Secondly, Pension calculations before were based onthe last salary drawn, which can cause higher pension amounts due to last-moment promotions or increments. To tackle the issue now pension won’t be calculated on the last drawn salary instead it will be calculated as an average of the last 36 months’ salary, by doing this forced eleventh-hour promotions and increments won’t have any effect on the amount of pension.
Student of MS Governance and Public Policy at NUST
Gmail : firstname.lastname@example.org