Enhancing retirement age?

K-P provincial government has already announced increasing its employees’ retirement age from 60 to 63 years

The federal and provincial governments in Pakistan are considering increasing the retirement age of their employees to avoid further accumulation in their liability of pensions and dues. This is contrary to the trend in other developing countries. We hear these countries considering reducing the retirement age of government employees to make room for the young unemployed. Lately, reports have been coming in of retiring employees’ pensions and dues being delayed due to shortage of funds. The Khyber-Pakhtunkhwa provincial government has already announced increasing its employees’ retirement age from 60 to 63 years. There is also a proposal to increase the age limit to seek premature retirement from 45 to 55 years. The Punjab government says K-P has done so because of its smaller liabilities. At present, the Punjab government pays Rs345 billion annually to its retired employees and its salary bill is Rs515 billion. It is of the view that if the retirement age is increased by three years, it will further add to its burden of pensions and dues.

Apparently, the suggestion that increasing the retirement age will buy the government time for payment of retirement benefits of employees looks workable, but in practice it would not be that simple. It would further accumulate retirement benefits making it more difficult for the government to clear the dues and pensions. The federal government has set up a committee headed by the prime minister’s adviser on institutional reforms to examine the proposal for increasing the retirement age keeping in view its legal, financial, administrative and organisational aspects. The Punjab government has expressed apprehensions what would happen if the money thus saved was not invested properly. It is in favour of a uniform policy for the whole country to avoid confusion.

We are at a stage where those at the helm do not have much room left for manoeuvering. They have to choose between the unpalatable and the disastrous.

Published in The Express Tribune, August 27^th, 2019.

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