EOBI’s pensions up 46% — from Rs3,600 to Rs5,250

Increase took effect from April 1; 337,000 pensioners will reap benefit

ISLAMABAD: For the first time in almost three years, pensioners of Employees Old-Age Benefits Institution (EOBI) will taste an increase in their retirement compensations, as the federal government has announced that their minimum pension would now be Rs5, 250 per month, which is an increase of around 46%.

The current minimum level stands at Rs3,600 and Finance Minister Ishaq Dar said the decision will benefit 337,000 pensioners. The increase will come into effect from April 1, 2015.

The increase has taken effect on April 1, 2015 and 337,000 pensioners will reap the benefit, said Dar. There are a total of 525,000 EOBI pensioners and one-third of them are already receiving pensions above the minimum level.

Since July 2012, almost two-third of the total pensioners are receiving minimum Rs3, 600 on a monthly basis.  Around 52% of the total EOBI pensioners are in Punjab, followed by Sindh that houses 31%, while 13% are in Khyber-Pakhtunkhwa and rest are in Balochistan and federal territory.



Under the 18th Amendment, the EOBI was supposed to be devolved to the provinces but the process has been halted, creating legal hindrances in giving a raise to pensioners who were employees of the private sector.

Dar said the fresh increase would put a Rs6.67-billion additional burden, which the federal government and the EOBI will bear equally. The increase is less than what had been recommended by the Board of Trustees at the EOBI that had approved Rs6,000 per month minimum pension with effect from July 1, 2014. However, the EOBI wanted that the federal government should alone bear the additional costs.  After coming into power in June 2013, the PML-N government has twice revised the minimum pension of civil servants, raising it to Rs6, 000 per month in the latest 2014-15 budget.

EOBI’s working

Meanwhile, the EOBI remains a self-sufficient and independent body and manages a fund of Rs290 billion, said Sualeh Faruqui, chairperson at EOBI.

At present, the employer contributes 5% of the minimum wage of Rs8,000 or Rs400 while the employee’s contribution is 1% of minimum wage or Rs80 per month. However, according to a study, the EOBI funds will deplete by 2027, if pensions are increased without raising employer and the employee’s contribution.

Dar said it was also decided that all the legal and constitutional issues related to EOBI’s status will be resolved by June this year, which will also decide the quantum of employer and employee’s contribution and the status of assets of EOBI’s assets.

He said employer, employee and the EOBI’s contribution have to be increased to make the institute financially viable.

After the 18th Amendment in the constitution, courts have barred the federal government to introduce amendments in the EOBI Act of 1976, which also became a hurdle in giving legal cover to the increase in minimum wages. Punjab has filed a constitution petition in the Supreme Court of Pakistan, seeking its intervention to get a hold over the EOBI’s assets — mainly its Rs290 billion funds. Sindh has already passed an Act and established its own EOBI.

Published in The Express Tribune, April 26^th, 2015.

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