ISLAMABAD: The finance ministry has again submitted a proposal to the Prime Minister’s secretariat for enhancing the retirement age to 63 years to further narrow the fiscal deficit in the next fiscal year, The News learnt reliably on Friday.
The proposal, if accorded by the Prime Minister, would help the finance ministry to save revenue of Rs 129 billion budgeted for civil and military pensioners. This would further narrow the fiscal deficit to half a percentage of the GDP.
According to budget documents, the Federal government had anticipated a fiscal deficit of 4.7 % of the GDP, with Rs 129 billion allocated for the pensions of civil and military officials for FY 2012-13. If the proposal is accepted, it would save Rs 129 billion—0.6 % of the GDP, thus lowering the overall budget deficit from 4.7 to 4.1% of the GDP.
In the outgoing fiscal year, the Federal government had allocated Rs 96 billion under the head of pension, but it released Rs 135 billion for this purpose. Of this Rs 135 billion, an amount of Rs 106 billion was meant for the military and Rs 29 billion for the civilian retired officials. However, it is interesting to mention that besides this huge amount, the federal government has another allocation of Rs 35 billion under the head of “Pay and Pension Reforms”.
“The federal government should focus on creating funds for financing such liabilities rather than taking administrative measures like enhancing the retirement age,” said a BPS-22 official, who will be retired very soon. Creating pension funds like other funds is the only way to retire federal and provincial employees who are become regular liabilities, he added.
However, another BPS-21 officer supported the Finance ministry’s proposal on the grounds that the average life expectancy of Pakistanis has increased due to better healthcare and good nutrition and it should be reviewed and enhanced to at least 63 years.
The Finance Ministry, in its proposal to the Prime Minister, said that the government should revise the retired age of the civil servants to 63 years with consequent changes in the Civil Service Act 1973. Justifying its proposal, the ministry argued that with frequent policy changes for promotion during 2000-07, as well as induction from lateral sources, the average tenure of a Federal secretary had been reduced from eight years to two to three years.
The government was losing fast experienced personnel because of the high turnover rate at the top bureaucratic level, because of the too frequent retirements. This was impacting consistency and continuity of the institution, its policy as well as its stability in decision making, it added.
The summary further cautioned that as pension liability had already crossed the over Rs 100 billion mark in the 2012 budget and with the current rate of retirement and rising life expectancy, the cost of pensions would most likely surpass the budget for the salaries of active employee.
Pakistan is among those countries which are following a multiple retirement age with regular civil servants retired at 60 years, judges of the high courts at 62 years, judges of the Supreme Court at 65 years, while the retirement age for military officers varies from rank to rank.