PM directs raising retirement age

Tasks finance ministry with completing deliberations within two days; ministry seeks more time

ISLAMABAD: Prime Minister Imran Khan on Thursday directed the Ministry of Finance to explore the possibility of increasing superannuation age limit of civil servants and early retirement of dead wood – a move that if implemented could transform the bureaucratic structure.

The current superannuation age of civil servants is 60 years, but average life expectancy has increased to 69 years, providing room for enhancing the limit by at least three years.

The premier instructed the Ministry of Finance to complete deliberations within two days.

Sources in the Ministry of Finance told The Express Tribune that the PM’s directions could not be honoured within 48 hours as there was a need for thoroughly studying the implications of the proposal.

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The finance ministry has sought more time from the PM Office to review the proposal that carries huge financial and administrative implications.

“The prime minister has been pleased to desire that the finance secretary will hold consultations with the Establishment Division and the finance departments of the governments of Punjab and Khyber-Pakhtunkhwa to evaluate legal, financial and administrative implications of increasing the age of retirement and early retirement,” according to the instructions issued by the PM Office.

Any change in retirement age limit would require an amendment in the Civil Service Act of 1973 and the PTI government does not have majority in the Senate to get any bill passed.

There is no concept of early retirement in civil service, but it is implemented in the armed forces. This has increased the pension bill of the military, standing at 77% of the total pension bill of the federal government.

The PM Office further directed the finance ministry that these deliberations may be completed within two days and a mutually agreed report with tangible way forward be presented for approval.

The Task Force on Institutional Reforms had floated the idea to increase the age by three years to 63 years. However, Task Force Chairman Dr Ishrat Husain wanted that in the first phase only the retirement age of federal secretaries should be increased by three years, according to a member of the task force.

But other members opposed the move, saying it could raise legal challenges for the government, which led to postponement of the proposal. But it has suddenly been given a new push by the PM Office.

The proponents of increase in the retirement age argue that due to increase in life expectancy there was a need to increase the superannuation age. The other strong argument was that the last PML-N government increased the age limit for undertaking competitive examination from 28 years to 30 years.

Also, the pension bill has ballooned significantly in recent years and increase in the retirement age will help control this expense. For fiscal year 2019-20, the government has proposed Rs421 billion for paying pensions, which is higher by 23% or Rs79 billion against the spending in this fiscal year.

The civilians’ pensions amounted to Rs94 billion only, up by 14.2% over the outgoing fiscal year. But in case the government decides to introduce the early retirement age, it can increase the pension bill. The military’s pension cost is Rs327 billion for the next fiscal year and one of the reasons behind it is early retirement age.

The federal government’s hands are tied when it comes to sending dead wood home.

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The inefficiency in the civilian bureaucracy is at its peak and there is no incentive to work hard, as both efficient and inefficient bureaucrats are equally rewarded.

It is not for the first time that the government has proposed to increase the retirement age.

The PPP government had also reviewed this possibility but eventually dropped the idea, as this could have extended the service tenure of certain Grade 22 officers, who were not in the good books of the then government.

The opponents of the increase in superannuation age say that this may increase unemployment in the country due to growing young population.