Sindh cabinet approves pension reforms to save Rs894b

KARACHI: The Sindh cabinet, while considering future financial implications of the pension payments to the provincial government employees, has approved a Pension Reforms Scheme that aims to save around Rs894.4 billion, and to avoid a pension bill that would otherwise surpass the salary bill within the next 10 years.

The approval came at a cabinet meeting held under the chairmanship of Chief Minister Syed Murad Ali Shah at the CM House on Friday.

Shah, who is also in-charge minister for the provincial finance department, told the cabinet that in 2012 the number of government employees was 477,570, and their monthly salary and pension bill was Rs11.78 billion and Rs 6.523 billion respectively.

In 2020, he added, the number of employees increased to 493,182 and the monthly salary bill rose to Rs23.97 billion while the pension bill soared to Rs13.329 billion. “If the same post-retirement liabilities, including pension, commuted value of pension, gratuity, family pension and others, continued unabated the pension bill would exceed the salary bill within next 10 years,” he said and added that a study had been conducted so that necessary reforms could be introduced to control the ballooning pension bill.

Shah said a restriction on early retirement (before minimum 25 years of service and 55 years of age) with a reduced pension, according to the number of years in service, was being proposed.

Talking about another reform proposal, he aid said that the average pay of the last three years of service would be the basis to calculate the amount of the pension instead of the last salary drawn. “Setting pensionable salary to average salary of last three years has a reasonable financial impact on the accrued pension liability of active employees,” he said.

Talking about the ‘family pension’, the CM proposed to limit it to immediate family members. “The family pension may be limited to wife or wives/husband/son (below 21 years)/daughter till marriage.”

The cabinet approved the pension reform proposals and appreciated the efforts of the CM to introduce reforms.