Pension reforms plan hits snag

Pay and Pension Commission chairperson resigns over differences

ISLAMABAD:

The chairperson of the Pay and Pension Commission has tendered her resignation due to the government’s intervention in its work and differences over consulting former heads of the previously constituted commissions.

Nargis Sethi, former principal secretary to the prime minister, tendered her resignation as chairperson of the commission, sources in the Ministry of Finance told The Express Tribune.

She is the second head of the commission that bowed out in the past over one year.

Her resignation has left a question mark over the government’s strategy to deal with an issue that Prime Minister Imran Khan had described last year as “more serious than the circular debt”. This could also lead to the waste of significant work that the commission has so far done to address pay structures.

After her resignation, the commission has once again become dysfunctional. Earlier, due to a lack of political will and ambiguity over its ownership, Commission Chairman Abdul Wajid Rana had resigned in July last year.

When contacted, the finance ministry did not comment on the development.

Sources said that Sethi decided to resign after the Ministry of Finance asked her to seek advice from Dr Ishrat Husain, former adviser to prime minister on institutional reforms and the head of Pay and Pension Commission in 2009. She was also asked to accommodate new members from the private sector, mainly chartered accountants and a banker, they added.

Sources close to Sethi said that the chairperson was not willing to seek input from the previous heads and wanted to complete the work independent of external influence.

The Ministry of Finance did not reply to the question whether the chairperson had difference of opinion over the proposal to induct private sector members including a banker into the commission.

Read The Pension Commission 2020

Another official said that the Ministry of Finance had approached Husain, asking him to advise Sethi in an informal capacity. Husain remained part of Imran Khan’s cabinet till the end of last month.

Sources said that there was also difference of opinion over establishing a pension fund and its management. Pakistan had taken $75 million in loan from the World Bank in the name of pension reforms. The government is paying Rs480 billion on account of pensions, which is almost equal to the annual salary bill of the existing government employees. Out of the Rs480 billion earmarked for pensions in the current fiscal year, an amount of Rs360 billion is for military pensions.

The federal government had constituted the Pay and Pension Commission to evaluate the salary structures of employees of federal and provincial governments as well as armed forces with a view to bringing some uniformity and to review the need for further increase.

The Pay and Pension Commission had almost finalised its recommendations to address the pay structure issues.

Sources said that significant work had been done on new pay scales for civil and military employees. The commission had almost finalised the revised computation method for house, transport and medical allowances.

The commission was planning to recommend a revision in all special allowances currently available to civil and military employees, they added. The government has recently approved a 25% special allowance for the armed forces. The commission had also worked out formulas for disparity reduction, correction of annual increments and for balance of salary between provincial and federal government employees post-18th Amendment.

The commission’s deliberations also included fixing the pay of various entities and special salary packages for technocrats.

There were also deliberations over fixing the pay of non-pensionable services, revision of special pay packages of regular departments like Railways, Anti-Narcotics Force and Airport Security Force.

Sources said that the second part of the report on pension reforms was under deliberation due to unavailability of data and comprehensions from certain quarters.

A few years ago, a claim had been made about ghost pensioners by the Auditor General of Pakistan department and the National Bank of Pakistan.

Since the commission had already done significant work, there was no need to engage more people at the last stage of the work, according to officials working in the commission.

After Sethi’s resignation, the new chairperson may review the whole exercise, which could further delay the resolution of a fiscal problem that is threatening fiscal sustainability of the country.

The Ministry of Finance had also wasted significant time in hiring an actuary firm, which is now expected to give its report by the end of this year.

Contrary to claims that bureaucrats are underpaid, a study of the Pakistan Institute of Development Economics (PIDE) has revealed that civil servants are earning 20% more than their counterparts in the private sector.

The “Cash Poor, Perk (Plots, Privileges) Rich” report has found that the bureaucracy was availing huge benefits without properly disclosing their pay slips, which in the case of top grade-22 are 10 times more than the average basic salary of the officer.

Published in The Express Tribune, September 30^th, 2021.

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