Govt employees’ pension issue back in focus as centre plans meeting with stakeholders

ISLAMABAD: The persistent and unresolved issue of pensions for government employees is once again under the spotlight as the federal government prepares to convene a crucial meeting with stakeholders to address the matter comprehensively.

Sources within the government reveal that while a meeting was originally slated for Thursday, it was canceled for undisclosed reasons. However, plans are underway to reschedule the gathering promptly to delve into the intricacies of pension reforms.

The impending meeting is expected to witness the participation of key representatives from various governmental departments, including the Establishment Division, Ministry of Finance, Ministry of Law, Ministry of Defence (for armed forces pensions), and other pertinent stakeholders. The Ministry of Finance, taking the lead in orchestrating this consultation, has arranged for the meeting to take place at the esteemed Q Block.

The urgency surrounding pension reforms stems from the escalating burden it poses on the national exchequer. With the consolidated federal and provincial pension expenditure projected to surge by over 20% from last year to this year, the issue demands immediate attention.

In a bid to tackle this burgeoning liability, the government has put forth a pension reform program to the International Monetary Fund (IMF). This program mirrors the measures proposed by former Finance Minister Ishaq Dar in the 2023-24 fiscal year budget. However, implementation was deferred due to opposition from the Establishment Division, citing potential disadvantages to civil servants.

The proposed reform agenda encompasses several pivotal changes aimed at curbing pension expenses. It includes alterations to the pension calculation formula, reduction of commutation rates, penalties for early retirement, narrowing the list of beneficiaries of deceased employees, and abolishing the practice of multiple pensions. Notably, spouses of deceased employees who are also government employees may no longer be entitled to pension benefits under the proposed reforms.

Moreover, retired employees rehired by the government will be presented with the choice between pension or salary, while any increase in pension will be indexed with the Consumer Price Index, capped at 10% per annum.

Amidst these deliberations, the economic landscape of Pakistan remains a cause for concern. Forecasts by the World Bank indicate a sluggish growth rate of 1.8% for the current year, coupled with soaring inflation at 26%, surpassing the targeted rate. The World Bank underscores the imperative of implementing reforms not only in the pension system but also in the energy sector and civil service systems to foster sustainable financial stability.

As the government braces itself to tackle the multifaceted challenges posed by pension liabilities, the forthcoming meeting holds promise for charting a course towards equitable and sustainable pension reforms, ensuring the welfare of both retirees and the nation’s fiscal health.