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May 16, 2019

Age is just a number

Newspost

 
May 16, 2019

Since 2005, all senior tax payers and especially the salaried class, are allowed a tax rebate for contributions made by them to an approved pension fund under the Voluntary Pension System Rules issued by the Ministry of Finance. The tax rebate starts at the age of forty, increasing with age. There is, however, a serious anomaly in the rules which discriminates severely against people who have attained the age of seventy years and are still working. The rules define retirement age as “any age between sixty and seventy years or twenty-five years since the age of first contribution to a pension fund, whichever is earlier”. Constrained by this rule, the pension funds refuse to accept contributions from taxpayers once they reach the age of seventy, even though they are perfectly willing and able to do so. This means that, on the one hand, the economy loses the benefit of their investment and, at the same time, senior citizens are denied a tax benefit which was available to them in full when they were younger.

This happens because for some reason, retirement age has been limited to the age of seventy, under the assumption that no reasonable person could ever be expected to continue to work beyond this age. The fact is that in this day and age, people can continue to work productively and support their families much beyond seventy and even eighty years. The anomaly can be corrected easily. All that is required is to replace the words “between sixty and seventy years” in Clause 17 of the Voluntary Pension System Rules, 2005 by the words “after sixty years”. This will allow all the senior citizens of Pakistan, irrespective of their age, to share the benefits of pension fund schemes.

Saeed Haider

Karachi

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