How long can a government pension run in Pakistan? A government servant qualifies for post-retirement pension after 25 years of service. It continues till the pensioner’s death and is then converted into family pension for the heirs. Under the Punjab Pension Rules, the family pension goes to the widow of the deceased. After the death of the widow, it can be claimed by the surviving sons not above 24 years of age, unmarried or eldest widowed daughter, or even by the eldest widow of the deceased son of the pensioner. If or when no qualifying person from the second generation remains, the family pension is then paid to the eldest surviving son or the unmarried or widowed daughter of the deceased son of the pensioner.
If you work for the government, be assured that the government will find someone to receive your pension, long after you are gone. It’s possible, though not likely, that the government employees in the service of Government of India at the time of First World War would have a family pension running even today. Believe it or not, our government pension rules can accommodate such a scenario.
These preposterous rules are not specific to Punjab and are prevalent across all provinces with some variations. Our government, that last year had to borrow even to service the interest cost on its debts, let alone to pay back the loans or even run the government, takes care of its employees through such a generous pension scheme that spans three generations, and possibly more than a century. Let it sink in.
The total pension liabilities of the federal and provincial governments last year claimed a quarter of revenues collected by FBR. This year the cumulative annual pension payments are expected to touch a trillion rupees. These pension liabilities are over and above the huge pension payments in various state-owned enterprises. About 34% of Pakistan Post budget for instance now goes just to service pension payments, whereas the Rs40 billion subsidy given to Pakistan Railways this year will go entirely into servicing the pension payments, which now far exceed wages and salaries of the employees.
Besides the sheer size, what is really frightening is the pace at which the pensions are growing. This abnormal growth is because of multiple reasons. Firstly, the duration of pension payments for an employee or his family is way longer than years of his service and can be 1.5 to four times as high. This means that the number of entrants in the pension scheme is many times higher than the rate of exit. The ever-expanding size of the government is also massively adding to the government pension liabilities. And if this is not enough, higher life expectancy has also pushed up the pension longevity and this trend is expected to continue.
In this regard, the budget white papers for K-P and Punjab governments this year are instructive. Pensions in Punjab have been growing at 24% per annum, outpacing 13% growth in revenue receipts by a wide margin. In K-P, the pension payments have grown by a whopping 7.8 times in nominal terms over the last 10 years. Moreover, presently K-P has 166,000 pensioners but an employee strength of 530,000. This means that in the next 30 years, the number of pensioners is likely to grow approximately four times.
The pension bomb is ticking, and it’s only a matter of time before it explodes. If it is not defused soon enough, the state may find itself in a quandary of who should it pay — its employees, pensioners or the citizens. There is just not going to be enough for all three to claim a share.
Published in The Express Tribune, June 30th, 2020.
Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.
COMMENTS (2)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ
Would the author like to focus on those of us, who DO NOT have any pensions at all??? Would he like to recommend to Govt a policy, in which some of the money saved by right sizing the Govt system goes towards us, the poor workers? Academics live in Ivory Towers, Policy Wonks seems to live in Palaces of Gold & Silver.
Please stop this. Major pension bill is that of military. Pensioner keep their lumsum amount in National Savings mostly, which means money come back to government. This aspect is ignored. Pensioners won't mind if government start giving saving certifucates directly.