Besides this, pensioners are also facilitated with medical allowance, earlier they had to claim this from the government. The government deserves great applause for this timely decision. This is because earlier; those who have had links or approaches can easily claim reimbursement of their medical bills and those who would be laymen and not familiar with the traditional working of civil servants draw no benefit from this allowance.
Many who apply, later give up on it due to self-respect and time constraints. Our office-bearers turn down many genuine requests on the grounds of corruption, favouritism and nepotism.
Now everyone may get allowance for their medical treatment. This allowance is based on the scale of retirement; those who retired at a scale 1-15 get a 25 per cent of their net increased pension and the remaining will get 20 per cent as per pre-determined formula.
Our democratic government has now started paying attention to the growing concerns of society. But this will also put great pressure on the sluggish fiscal deficit which is now at an alarming level. It is the foremost duty of the government to look after the living standards of people and take steps in order to improve them up to international standards. There must be a clear and comprehensive plan which must answer from where this money will come from?
Latest monetary policy has alarmed watchmen that the government will be borrowing more from private banks and institutions. This means more interest payments. I am not arguing against the rise in pension neither am I justifying the government’s position, but want to mention that this rise could have been utilised for financing development projects.
There are many pensioners whose pension payments exceed Rs30,000 per month. They are at an age where they have no obligations. Some are living happily with their offspring and doing nothing with their money, others are investing or doing business. In short, the use of that money is not contributing to the economy in a well-established manner.
This money can be used in many forms that have direct impact on our contracting economy. Like mutual funds, defence savings certificates and Pakistan Investment Bonds are the best financial instruments which can tackle the demand of household as well as business. Mutual funds are the most important and fruit-bearing financial instrument widely used nowadays.
Our neighbour, India has made tremendous growth due to many reasons and mutual funds are one of them. Money and capital market of India is well-established as compared to Pakistan. Many useful and market oriented products have been designed by Indian business and brokerage houses to cater to the need of every segment of their ever-growing market.
Being a developing economy we should try to avail every opportunity to save every penny. As we have the least saving rate in the subcontinent that is 10 per cent of GDP, whereas India is saving 25 per cent of its GDP. The need of the hour is that it be made compulsory; through legislation, executive order or any such means, that every pensioner should invest certain portion of his pension in certain established financial instrument. By doing so, they will not only get profit on his saving but also contribute effectively in the development of the country.
The best way to invest this money is to purchase mutual funds. Because this instrument can be traced down in many forms; on the other hand these funds have reasonable profit and better liquidity factor as well. A person who wants to draw his investment due to urgency can easily get it in few hours. Money pooled through such investment can be wisely used in many development projects that have been delayed, stopped or dropped out due to lack of funds.
We already have a well established and managed mutual fund market known as “Mutual Fund Association of Pakistan”. Mutual Fund Association of Pakistan is the trade body of Pakistan’s multi-billion rupee asset management industry. They have 26 members and their members manage in a wide variety of investment vehicles including bonds, stocks, money market instruments, government securities and bank deposits. Mutual fund industry had gradually increased its share in the money market but still not concentrated. Now is the time to market the benefits of these funds on a vast scale.
Due to lack of marketing activities and in the absence of the government interest, members cannot further expend their clientele. Efforts need to be made to make the public in general and policy makers in particular aware of the benefits of these funds.
Published in The Express Tribune, August 9th, 2010.
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