Commission begins work to streamline pay, pension

Of Rs470b earmarked for pensions in current fiscal year, Rs369b is for military retirees

ISLAMABAD:

The Pay and Pension Commission (PPC) on Thursday began its exhaustive work to review the existing public sector salary structures that favours hardly two dozen departments, is financially unviable and discouraging talent at Pak-Secretariat.

The maiden meeting of the commission, headed by former principal secretary to the prime minister Nargis Sethi, was also attended by Finance Adviser Dr Abdul Hafeez Shaikh.

Both Shaikh and Nargis had their own hopes from the commission and reservations over the existing structure, including availability of credible data to take decisions.

“The current model for disbursement of pay and pensions is not sustainable,” an official handout quoted Shaikh as saying.

“The success of the Pay and Pension Commission is dependent on provision of reliable and authentic data in a timely manner from all concerned,” the Ministry of Finance cited Nargis as saying.

The chairperson has set up nine sub-groups to review the existing basic pay scales, allowances, perks, ancillary benefits, pensions and pays of the federal, provincial government departments and the armed forces.

This month Prime Minister Imran Khan had reconstituted the PPC after its first chairman Wajid Rana resigned due to lack of support from the finance ministry.

The government has set up the commission at a time when it is again facing pressure to increase the salaries by at least 100-150% and end discrimination in pays of various federal and provincial government departments.

There are around 26 civilian and military departments that are getting 50% to 100% higher than the standard pay packages for rendering “extraordinary services”.

The federal government also gave special allowances to the Federal Investigation Agency (FIA) and the National Accountability Bureau (NAB) that created unease among the employees of the Pakistan Secretariat – the seat of federal bureaucracy.

An official working in the Pak Secretariat Islamabad is drawing less salary than a person serving in a provincial capital.

The federal government’s pay structure has not remained lucrative after two provincial governments approved additional allowances of up to 150%.

In the last high-powered board meeting, which was held to promote officers from Grade-21 to 22, the board did not promote those officers who were eligible but had not served in the federal government aimed at forcing them to leave their lucrative positions.

The scope of the commission includes federal and provincial civil servants, other government servants, civilians paid from defence budget, all armed forces, civil armed forces and all employees of the public sector enterprises.

It is unlikely that the commission would finalise its report before the budget and may take at least one to two years to finish the job, a member of the commission said.

However, the commission would give its interim recommendations on the issue of increasing the salaries of the government employees before June next year, the member added.

While assuring the commission of his full support, the finance adviser also recommended to the body that the government was willing to consider its recommendation even prior to the finalisation of the report, the finance ministry stated.

The finance ministry faces growing burden of salaries and pensions but almost 90% pensions are meant for the military. Out of the Rs470 billion earmarked for pensions in the current fiscal year, an amount of Rs369 billion is for military pensions.

There is also a need to set up a pension fund as currently the pensions are paid from the budget, which is unsustainable.

The Defined Contribution Scheme (DCS) is now being adopted by the countries where the employee contributes in future pension plans. However, the benefits of the employees who have already retired cannot be reduced.

The commission is expected to highlight the existing distortions and anomalies in the pension scheme and to recommend remedial measures.

Unlike the previous smaller commission, the reconstituted commission comprises 25 members and senior professionals from the public and private sectors as well as serving federal and provincial secretaries, AJK and G-B, and other senior officials from all the governments. These officials were also in attendance in the PPC meeting.

The finance adviser expressed confidence that the PPC will come up with a financially viable solution to streamline the basic pay scales of government employees and admissible allowances and pensions, according to the ministry.

The commission would follow a consultative process to resolve the burgeoning expenditure on the national exchequer, he added.

Nargis noted that the commission would review the existing pay and pension structures, allowances, perks and facilities and evaluate possibilities of their monetisation.