PESHAWAR: The Khyber Pakhtunkhwa (KP) Finance Minister Taimur Salim Jhagra pointed out that pension is one of the major “budget challenge” thus the government would table amendment to Civil Servants Act to introduce contributory pension for new employees.
The Finance Minister said that the pension fund was less than Rs1 billion in 2005 but due to lack of timely reforms, today it has increased to Rs83 billion. Jhagra said that almost every other country shifted away from unfunded benefit pension programs but it is still exist in Pakistan. Jhagra said that now pension is being provided through the deduction system. He tweeted that KP’s pension bill will increase from Rs80 billion to Rs507 billion within this decade, which is about 48% of the budget.
Regrettably, the minister said, the past governments have not tried to address this issue and now the PTI government has to take the lead to tackle it. The Finance Minister informed that after the passage of amendment to Civil Servants Act from the Provincial Assembly, the contributory Pension Program will be launched. He said that it will not be applicable to the existing employees unless they volunteer to join it.
He said that under the contributory pension, an employee’s pension fund is created with the financial contribution of the employee and the government. “There are several benefits of this system. Most importantly, funding for employee pensions is secure and there is no risks to pension,” the minister said. Jhagra said that the employee can withdraw most of the benefits even before their retirement.
He said that the current pension system goes on for generation to generation even after the death of an employee which is a major burden on national exchequer. He furthered that thousands of people retired at the height of their careers at the age of 45, receiving tax benefits in exchange for retirement, as well as a second salary. He said that such practices could be stopped only through pension reforms. Jhagra said, “We aren’t threatening but protecting our employees’ pensions and their future through reforms.”