EOBI, finance ministry’s disagreement: Pensioners await the twice-promised increase
Over 3 million individuals continue to receive Rs3,600 since July 2012
ISLAMABAD:
As the Ministry of Finance and Employees Old-age Benefits Institution (EOBI) wrestle over the question of who will bear the cost, over 3 million pensioners still await the increase in their monthly pension, raised from Rs3,600 to Rs6,000 in this year’s budget.
The EOBI pensioners, mostly comprising of individuals retired from semi-government and private sectors, have been denied the benefits of a minimum Rs6,000 monthly pension, which was announced by Finance Minister Ishaq Dar in his budget speech in June this year.
The pensioners continue to receive Rs3,600 on a monthly basis since July 2012. To mitigate pensioners’ difficulties, the PML-N government had determined the minimum pension at Rs5,000 for financial year 2013-14. However, due to disagreements between the EOBI and the Finance Ministry, the decision could not be implemented, said an EOBI official. This year, the pension has been raised again but the pensioners’ wait continues.
The EOBI, through the Ministry of Human Resources Development, sent a summary to the finance ministry, requesting it to bear the cost of the increase. However, the finance ministry did not entertain the request, arguing that the EOBI was a self-sufficient and independent body, adding that the federal government will not fund its operations.
The disagreement still persists and pensioners continue to be the victims. According to an official of the finance ministry, the decision to increase pensions of retired employees of civil and armed forces did not apply on the EOBI. He said the Board of Trustees of EOBI was independent to take its decision.
According to minutes of two Board meetings of the EOBI, the Board of Trustees approved the increase in minimum pension to Rs6,000 per month with effect from July 1, 2014. However, the EOBI wants that the ministry should bear the additional cost, which roughly amounts to Rs5 billion per annum.
The government has established a high-powered committee, chaired by Finance Minister Ishaq Dar, to resolve the issue. Naseem Iqbal, a member of the Board, will represent the employer and Yousuf Sarwar, another Board member, will represent employees’ interest in the committee.
Meanwhile, a ministry official said that it was unprecedented that the finance ministry shared the EOBI’s burden.
EOBI’s position
Meanwhile, examining the EOBI’s financial muscle reveals that the institution has projected its total revenues at Rs51.4 billion against total expenditures of Rs25.6 billion for the ongoing fiscal year 2014-15. It has also projected a surplus of Rs33.3 billion for the current fiscal year.
The EOBI has projected pension benefit payments around Rs15.7 billion.
The disagreement between the federal and provincial governments over minimum wages is yet another hurdle in implementation of the minimum pension decision. At present, the employer contributes 5% of minimum wage of Rs8,000 or Rs400 while the employee’s contribution is 1% of minimum wage or Rs80 per month.
For the EOBI, this has created an issue as the employers are not ready to increase their contribution.
After the 18th Amendment in the constitution, the EOBI has been devolved to the provinces and the courts have barred the federal government to introduce amendments in the EOBI Act of 1976, which has also become a hurdle in giving legal cover to increase in minimum wages.
The Sindh High Court has also barred the federal government from making any amendments in the EOBI Act of 1976 through Finance Bill. This has meant that few employers pay their contribution at the rate of Rs6,000 per month, which is another matter of concern for the EOBI.
Published in The Express Tribune, December 28th, 2014.
As the Ministry of Finance and Employees Old-age Benefits Institution (EOBI) wrestle over the question of who will bear the cost, over 3 million pensioners still await the increase in their monthly pension, raised from Rs3,600 to Rs6,000 in this year’s budget.
The EOBI pensioners, mostly comprising of individuals retired from semi-government and private sectors, have been denied the benefits of a minimum Rs6,000 monthly pension, which was announced by Finance Minister Ishaq Dar in his budget speech in June this year.
The pensioners continue to receive Rs3,600 on a monthly basis since July 2012. To mitigate pensioners’ difficulties, the PML-N government had determined the minimum pension at Rs5,000 for financial year 2013-14. However, due to disagreements between the EOBI and the Finance Ministry, the decision could not be implemented, said an EOBI official. This year, the pension has been raised again but the pensioners’ wait continues.
The EOBI, through the Ministry of Human Resources Development, sent a summary to the finance ministry, requesting it to bear the cost of the increase. However, the finance ministry did not entertain the request, arguing that the EOBI was a self-sufficient and independent body, adding that the federal government will not fund its operations.
The disagreement still persists and pensioners continue to be the victims. According to an official of the finance ministry, the decision to increase pensions of retired employees of civil and armed forces did not apply on the EOBI. He said the Board of Trustees of EOBI was independent to take its decision.
According to minutes of two Board meetings of the EOBI, the Board of Trustees approved the increase in minimum pension to Rs6,000 per month with effect from July 1, 2014. However, the EOBI wants that the ministry should bear the additional cost, which roughly amounts to Rs5 billion per annum.
The government has established a high-powered committee, chaired by Finance Minister Ishaq Dar, to resolve the issue. Naseem Iqbal, a member of the Board, will represent the employer and Yousuf Sarwar, another Board member, will represent employees’ interest in the committee.
Meanwhile, a ministry official said that it was unprecedented that the finance ministry shared the EOBI’s burden.
EOBI’s position
Meanwhile, examining the EOBI’s financial muscle reveals that the institution has projected its total revenues at Rs51.4 billion against total expenditures of Rs25.6 billion for the ongoing fiscal year 2014-15. It has also projected a surplus of Rs33.3 billion for the current fiscal year.
The EOBI has projected pension benefit payments around Rs15.7 billion.
The disagreement between the federal and provincial governments over minimum wages is yet another hurdle in implementation of the minimum pension decision. At present, the employer contributes 5% of minimum wage of Rs8,000 or Rs400 while the employee’s contribution is 1% of minimum wage or Rs80 per month.
For the EOBI, this has created an issue as the employers are not ready to increase their contribution.
After the 18th Amendment in the constitution, the EOBI has been devolved to the provinces and the courts have barred the federal government to introduce amendments in the EOBI Act of 1976, which has also become a hurdle in giving legal cover to increase in minimum wages.
The Sindh High Court has also barred the federal government from making any amendments in the EOBI Act of 1976 through Finance Bill. This has meant that few employers pay their contribution at the rate of Rs6,000 per month, which is another matter of concern for the EOBI.
Published in The Express Tribune, December 28th, 2014.