Paying pensioners

After a lifetime dedicated to toil and labour, the least the workers of this country deserve is a dignified and comfortable retirement. The Employees Old-Age Benefits Institution Act of 1976 was meant to do just that, providing pensions to workers in both the public and private sectors. It hasn’t quite worked out as intended. The Supreme Court has taken notice of complaints by employees of the federal government that their pensions and general provident funds are not being paid out on time, and asked the government to provide a list of every employee who has not been paid pension as mandated by law. The problem is both one of typical bureaucratic inertia and structural problems. Apart from the usual — though still inexcusable — delays that we have all come to expect from the government, further problems have been caused by the introduction of ATM cards to withdraw pensions. Previously, senior citizens had to go to designated branches of the National Bank of Pakistan and get their money in person and now they have to register for an ATM card with Bank Al Falah. What has happened, according to complaints by multiple pensioners, is that both banks are telling them they should get their money from the other bank, leaving the pensioners struggling to make ends meet as a result. Belatedly, Finance Minister Ishaq Dar took notice of the situation and directed the accountant general Pakistan Revenues to ensure technological and coordination glitches do not prevent pensions from being disbursed on time.

Even if such problems are sorted, we need to rethink the provision of social security to senior citizens. People who rely on a fixed income that is not indexed to inflation see the value of their pension fall every year. Ideally, the EOBI would link pensions to inflation but it has been stingy in its increases. The minimum pension, which is what two-thirds of the over half-a-million EOBI pensioners receive was increased from Rs3,600 a month to Rs5,250 a month last year but that was the first increase in more than three years. The reason the minimum amount is so low is that employers make only a token contribution to pensions. The employer’s contribution to a pension is five percent of the minimum wage which equals about Rs500 a month. That amount cannot be increased at the moment since jurisdiction over the EOBI is being fought in the courts. The 18th Amendment devolved pensions to the provinces but the process has been delayed. Now the provinces want control of the EOBI and its Rs290 billion fund, and till the issue is resolved there can be no increases in pensions. Still, the least the government can do in the interim is ensure that the money which is owed is always paid out on time.