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Rethinking pension

Reforms to pension policies are necessary to ensure universal coverage and adequacy

October 01, 2023


eated on a bench in a park in Rawalpindi, Khalid Hussain reflects on his life. As winter approaches, he is concerned about his wife and himself. They need food, medicines and other necessities. All his life, Khalid Hussain has been among support staff at a medical laboratory in the city. “I’ve worked in the laboratory for about 30 years. When I turned 55, they informed me that I couldn’t keep working there because I was too old and lacked energy. I requested and they agreed to let me work for some more years. At 58, I had to leave.” He has a son who struggles to earn money, barely making enough for his own wife and children. At 62, Khalid feels lost.

Older people in Pakistan are living a precarious life. Financial insecurity can make old people more vulnerable to exploitation and abuse. This includes financial abuse by family members or caregivers. For elderly Pakistanis, income security is one of the biggest problems. There is a growing concern in the society about the wellbeing of older people as the country’s elderly population rises.

Only a fraction of old people in Pakistan receives pensions. There are just two pension plans in Pakistan. One is a tax-funded plan for government workers; the other is an Employee Old Age Benefit Institution (EOBI) plan with a contribution component for private-sector workers. The two pension schemes do not even cover more than 10 percent of the elderly population in the country. According to estimates, Pakistan has the ninth-largest labour force in the world: about 75 million people. Agriculture employs 44 percent, followed by industry (22 percent) and services (34 percent). However, according to EOBI data, there are only 10 million people insured through the EOBI. This is only 12 percent of the labour force. The government must take action to increase EOBI coverage because there is such a huge coverage gap. To persuade employers to comply, the government should consider making it simpler for businesses to register their employees with the EOBI and enhancing monitoring techniques.

The purpose of any pension system is to help the elderly and shield them from poverty. Pension adequacy is therefore vital. It is crucial that the pension payment be enough to take care of the beneficiary’s needs. It is quite sad that the EOBI pension’s adequacy is subpar. EOBI pensioners currently receive a very meagre monthly pension of Rs 10,000 (up from Rs 8,500 in July 2023). It is difficult for old individuals to cover the basic necessities, such as food, clothing and medical expenses, with this amount.

Old women are more susceptible in this scenario since they usually rely on their husbands for financial support and a majority of elderly men do not have a pension or other source of income. As a result, it is very challenging for elderly women to fulfil their basic needs. In addition, because older individuals depend on other family members for financial assistance, the family support system does not cover the costs of older women’s healthcare or medical bills. Most often, older women have no real property to their name. Women’s rights to land and property are constrained as a result of discriminatory social standards that lower women’s economic status and make them more susceptible to poverty.

The protection of elderly people’s rights and welfare is a significant problem that has long been ignored. It is a source of great concern that there was no legislation for the welfare and rights of old people in the country prior to 2014. Khyber Pakhtunkhwa’s provincial government passed the Khyber Pakhtunkhwa Senior Citizens Act in 2014, establishing the first-ever legal framework for the welfare of seniors. This was followed by laws passed by the governments of Sindh and Balochistan, and the Islamabad Capital Territory. The Punjab still lacks a law protecting the rights and care of the elderly.

The law in Khyber Pakhtunkhwa was passed in 2014, but the rules were notified in 2017. It took the government three years to prepare the rules for such a significant piece of legislation. In Sindh, the law was enacted in 2016. However, the rules were notified in 2021.

The Madrid Plan of Action on Ageing, which underlines the value of older people having a secure income, access to healthcare, a place to live and a voice in decision-making, is also worth mentioning. Pakistan is a signatory to this plan. However, Pakistan still doesn’t have a national policy regarding the rights and care of older people. The government’s social protection plans and programmes must take the prosperity and well-being of the elderly into account. Examining the pension plans’ coverage and adequacy is crucial. Reforms of pension policies is an immediate need. This will improve the social protection system’s resources without placing an unnecessary burden on the government.

The writer is a communications specialist and a freelance writer. He is based in Rawalpindi and can be reached at: qureshiwaqasgmail.com. His X handle: qureshiwaqasA