ISLAMABAD: Prime Minister Nawaz Sharif has directed the Ministry of Finance to finalise a blueprint of pension reforms within a month to ensure the hassle-free transfer of pensions to government servants’ existing accounts the month after their retirement.
Chairing a meeting here on Thursday, Finance Minister Ishaq Dar shared the prime minister’s directives about the necessary reforms and directed the authorities to finalise an outline within 15 days, which could be presented to the prime minister for approval.
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The federal government has also asked the managers of the Punjab Pension Fund – a recently established company charged with managing the bulging pension bill – for a presentation but was not satisfied with the roadmap they presented.
The Punjab Pension Fund seeks to manage the future of increasing pension bills through investments in equity and capital markets and other ventures, to reduce financing pressure on the provincial government. However, the prime minister’s main objective was to facilitate old government servants by making the pension disbursement process efficient, while managing the growing pension bill.
An official privy to the meeting told Dawn Mr Sharif had ordered Mr Dar to focus reform on technology-based solutions for lengthy procedures so that the salary account of a retiring officer is credited with pension the very next month, which the pensioner can withdraw through automated teller machines (ATMs), smart cards or cheques.
The PM envisions a system where retired government servants do not have to run from pillar to post after completing their documentation and receive their first pension payment after six months. “An official who has given his life to the service of the government deserves to be treated with respect,” the official quoted the minister as saying.
The meeting was told of a recent incident in Sheikhupura, where National Bank employees had embezzled the pension payments of several deceased individuals. At this point, it was suggested a biometric system should be developed which could ensure that payments to deceased pensioners stop immediately.
The minister said the government wanted to simplify the process of pension disbursement to retiring government servants because pension cases were not submitted by departments on time, despite active follow-up by the pensioners themselves.
Punjab Pension Fund General Manager Aquil Raza Khoja told the meeting that his fund aimed to generate revenue for the discharge of the Punjab government’s pension liabilities and was looking to revamp the old system of processing pension cases.
Ishaq Dar observed that the Punjab government had adopted a sound business model to facilitate future pension liabilities, but it didn’t include the reforms it intended to introduce. He asked for a robust and overhaul of the system to create a model that could also be followed by the federal and provincial governments.
He said the new retirees, who have served until July 1, 2014, will receive their pensions via the direct credit system. Their pensions will be credited directly to their salary accounts to make the system convenient for all freshly-retired personnel.
The International Monetary Fund has already asked the government to raise the retirement age as part of measures to contain the pension bill after pensions surged to Rs215 billion this year, including more than Rs163 billion that went to military pensioners.
Published in Dawn, July 11th, 2014