ISLAMABAD: The government has deferred a plan of 76 per cent increase in pension of the Employees' Old-Age Benefits Institution (EOBI) beneficiaries and directed the Ministry of Overseas Pakistanis and Human Resource Development (OP&HRD) to come up with an “actuarial valuation” of the hike.
Special Assistant to the Prime Minister (SAPM) on Overseas Pakistanis Zulfi Bukhari had announced an increase of Rs2,000 per month in the minimum pension of the EOBI with effect from January 1, 2020, in a bid to provide relief to the most deserving and vulnerable segments of the society.
The EOBI minimum pension was Rs6,500 per month which after the increase was to become Rs8,500 per month. The SAPM had also announced 30% increase in existing pension formula.
The increase in pension would benefit more than 400,000 EOBI pensioners.
The estimated financial impact of the enhancement in monthly minimum pension and the 30% Increase in the formula would be Rs.5.9 billion for the financial year 2019-20 and the EOBI was to bear it.
The matter was placed before the EOBI Board of Trustees in its 121st meeting on February 21, 2020. The board unanimously recommended the increase in minimum pension. The board had earlier decided to add the financial impact of Rs5.9 billion to EOBI budget in its 120th meeting held on Oct 17, 2019.
In order to implement the increase in the pension in line with the recommendation of the Board of Trustees, the Ministry of Overseas Pakistanis sought approval of the federal cabinet.
However, in a cabinet meeting, Minister for Law Farogh Naseem objected to the proposal saying under Section 21 of the EOBI Act, 1976, pension can only be enhanced on the recommendations of an ”actuarial valuation” to be done after every three years.
An actuarial valuation is a type of appraisal of a pension fund's assets versus liabilities, using investment, economic, and demographic assumptions for the model to determine the funded status of a pension plan. The assumptions are based on a mix of statistical studies and experienced judgment
The ministry of OP&HRD informed the meeting that the process for appointment of actuary is under way to make valuation. The minister for law, however, argued that an increase should not be made until the completion of actuarial valuation.
Later, the cabinet directed the ministry to complete the actuarial valuation, as per statutory requirement, prior to submitting the proposal of increase in pension of EOBI pensioners.
The EOBI, an autonomous body under the administrative control of the Ministry of OP&HRD, was established under the EOBI Act, 1976. The EOBI pension scheme is applicable to the industrial, commercial and other establishments.
The pension is financed through contributions from the employers and employees at the rate of 5% and 1% respectively on the wages as declared under the Minimum Wages for Unskilled Workers Ordinance, 1969. The scheme provides old-age, invalidity and survival pension to the insured persons.
Previously the monthly minimum pension was enhanced in January 2019 from RS.5,250 to Rs.6,500.
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ