The coronavirus epidemic is taking its toll on all aspects of life. The apprehensions of EOBI pensioners have come true. Several months ago, the federal government had announced that the monthly pension under the Employees Old-Age Benefits Institution would be increased from the existing Rs6,500 a month to Rs8,500 a month with effect from January this year. The raise did not materialise in January, and the beneficiaries were told that the payment of increased pensions would begin from March with arrears for the months of January and February.
However now, the federal government has deferred the planned increase in the pension, saying that an increase in the EOBI pension is linked to an ‘actuarial’ valuation. The Special Assistant to the Prime Minister on Overseas Pakistanis, Zulfi Bukhari, had also announced a 30 per cent increase in the existing pension formula. The increase in the EOBI pension was to benefit 400,000 pensioners. The estimated financial impact of the enhancement in EOBI pension and the 30 per cent increase in the pension formula would come to something around Rs5.9 billion during the fiscal 2019-20 and the EOBI was to bear it. The matter was placed before the EOBI Board of Trustees at its previous meeting on February 21, 2020. The board had recommended the increase in the minimum pension.
As per rules, the relevant ministry sought the approval of the federal cabinet to implement the proposed increase. However, at a cabinet meeting the minister of law objected to the proposed increase on grounds that under Section 21 of the EOBI Act, 1976, pension can only be increased on the recommendations of an ‘actuarial valuation’ to be done after every three years. An actuarial valuation establishes the relationship between a pension fund’s assets and the estimated returns on them. According to the relevant ministry, the process for the appointment of an actuary is underway.
Given the existing situation, the pensioners would have to wait endlessly for the promised increase. Perhaps, some official(s) somewhere had forgotten the requirement of actuarial valuation.
Published in The Express Tribune, April 27th, 2020.
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