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Minister for sustainable ways to rationalise pay, pensions


April 7, 2021

ISLAMABAD: Finance Minister Hammad Azhar on Tuesday asked the pay and pension commission to find transparent, feasible and sustainable ways to rationalise remuneration structure of the government’s serving and retired employees.

“The current model for disbursements of pay and pensions is not sustainable and there’s a need to rationalise salaries, pensions, allowances, perks by removing anomalies to ensure equity,” Azhar said during a meeting with Pay and Pension Commission Chairperson Nargis Sethi.

The minister asked the commission to find a way forward which is transparent, feasible and sustainable in the long run. He extended full support and facilitation to the commission.

Azhar said the pay and pension commission has a very challenging task ahead as the federal and provincial government employees are looking forward with great hope towards the recommendations of the commission.

The meeting was apprised about the working of the pay and pension commission to streamline the existing pay and pension structure as per mandate of the commission and the consultative process being followed to ensure all stakeholders are onboard in working out a financially viable solution for disbursement of pay and pensions.

“The current pension payment system is a massive burden on our economy,” she Sethi said.

The meeting was briefed about working of sub-committees, which have been assigned terms of reference to deliberate and present firmed-up proposals for harmonisation of pay and pension system across the country.

Struggling to reduce fiscal deficit, the government planned to revise pay structure of its employees and pensions of retired staff.

The pension bill at federal and provincial levels crossed Rs1 trillion and is set to exceed manifold in the years to come. The government decided to undertake crucial reforms in the pension sector that is becoming another monster on the fiscal side of the economy.

The International Monetary Fund projected Pakistan’s net present value of pension spending to go up by 10.9 percent of GDP in the next 30 years till 2050.

Sanctioned and actual working strength of civil employees of federal government stood at 663,234 and 581,755 respectively, according to establishment division report 2018-19. This was in addition to around 560,000 employed in armed forces. Alone a 25 percent raise in salaries of federal secretariat employees cost the government more than Rs21 billion.

Total cost of operating the civil government during the current fiscal year was estimated at Rs495 billion and half of which is for payment of salaries. This is in addition to Rs475 billion allocated for pensions for the fiscal year.