PESHAWAR
\nKhyber Pakhtunkhwa\u2019s (KP) Minister for Finance and Health Taimur Khan Jhagra has said that the provincial government\u2019s move to introduce contributory pensions for new employees will help ease budgetary challenges and safeguard the pensions of government employees.
\nHighlighting the reform in a tweet on Monday, he said that \u201cpensions expenditure is the biggest single cost challenge facing the government of Khyber Pakhtunkhwa,\u201d and the implementation of contributory pensions will help address it.
\nUnderlining the principle benefits of the move, Jhagra detailed that contributory pensions will accept contributions from employees and the government to constitute an individual\u2019s pension fund, which will then be invested, with the individual assisting in the selection of the investment. He added that when an employee retires, they will have the option of withdrawing the pension or continuing to invest.
\nJhagra mentioned that the funding for employee pensions is secured \u201cand there is no danger that employees\u2019 pensions will be at risk. Also, it can mean that employees can withdraw pensionary benefits even if they retire before 25 years of service\u201d.
\nThe contributory pension program will be a part of the terms of service of new employees after the proposed amendments to the civil servant act are passed by the provincial assembly. \u201cIt will not apply to existing employees unless they voluntarily want to enter into it,\u201d he emphasised. In comparison with other countries, Jhagra commented, \u201cAlmost every other country on earth has shifted away from unfunded, defined benefit pension programs, such as Pakistan has. Where defined benefit programs exist, they are funded at least partially through a pay-as-you-go system, by deductions from existing employees\u201d.
\nHe remarked that KP\u2019s pension bill alone would rise from Rs. 80 billion to Rs. 507 billion within this decade, making up almost half (48 percent) of the budget, which is why \u201cthe best time for pension reform was yesterday\u201d. Lamenting fiscal impediments in the past, he noted, \u201cSadly, past govts, because of incompetence & lack of will, never attempted to deal with a small problem\u201d.
\nThe minister said KP has led the way for Pakistan in tackling the issue of pensions by increasing the early retirement age to 55, reducing the unbelievably bloated pension hierarchy, stopping beneficiaries from taking multiple pensions, restraining active employees from taking a pension, and repurposing the pension fund. Pensions can be drawn by up to 13 layers in a family tree, continue even a century after an employee\u2019s death, and reactivated after stopping for a widow, son, unmarried or widowed daughter, wife\/son \/unmarried or widowed daughter of a deceased son, parents, brothers and sisters.
\nAccording to Jhagra, \u201cThis was resolved by reducing pensions to widows\/widowers, children & parents (not typical but we felt it was important in our cultural context). The resultant savings allowed us to increase widow and children pensions from 75% to 100% of the pensioner\u2019s amount\u201d. Discussing a miscellaneous breakdown of provincial data, he added, \u201c1935 individuals were found to be taking two pensions, and 738 active employees have been found also taking a pension for a deceased family member. These practices have been stopped\u201d.
\nThe minister continued, \u201c5000 plus individuals retired at the peak of their careers, age 45, drawing a pension from your taxes in lieu of retirement but going on to enjoy a 2nd salary in the private sector. Increasing [the] early retirement age alone to 55 has resulted in savings of over Rs. 12 billion a year\u201d.
\nHe highlighted that the pension fund has been essentially re-purposed to partially offset payment from interest earned toward the annual pension expense, and DMG and PCS officers have agreed to make pay-as-you-go contributions to pensions beginning last year. \u201cNo other government in Pakistan, provincial or federal, has done as much to arrest a problem that is a real elephant in the room. We are safeguarding the pensions of our employees and protecting their futures, not putting them at risk,\u201d he added.<\/p>\n","protected":false},"excerpt":{"rendered":"
PESHAWAR Khyber Pakhtunkhwa\u2019s (KP) Minister for Finance and Health Taimur Khan Jhagra has said that the provincial government\u2019s move to introduce contributory pensions for new employees will help ease budgetary challenges and safeguard the pensions of government employees. Highlighting the reform in a tweet on Monday, he said that \u201cpensions expenditure is the biggest single […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":{"0":"post-245711","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-top-news"},"yoast_head":"\n