January 20, 2003	Monday	Ziqa'ad 16, 1423

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ISLAMABAD, Jan 19: Having earned Rs20 billion savings in 2002, the federal government on Sunday announced two per cent additional profit to pensioners on their 10-year fixed saving accounts of Rs10,000 to Rs1 million with effect from Jan 20, 2003.

The government has separately raised Rs2 billion through saving initiative offered to overseas Pakistanis in the United Arab Emirates last year and is considering to extend the facility to Pakistanis in Oman, Bahrain and Qatar and perhaps other countries in due course of time after proper examination and analysis.

The director-general of the central directorate of national savings (CDNS), Ahmad Owais Pirzada, told newsmen here at a briefing that 11.04 per cent final composite profit would be given to pensioners on their principal investment as against 9.12 per cent available on other regular monthly income schemes. The pensioners who already have savings in CDNS would also have the right to benefit from the new scheme.

The pensioners of federal and provincial governments, armed forces, autonomous and semi-autonomous government bodies would have to open pensioners’ benefit accounts (PBAs) with CDNS centres instead of keeping savings certificates.

Pirzada said the pensioners would have to deposit a minimum of Rs10,000 with multiples of Rs1,000 and the maximum investment limit would be Rs1 million. The CDNS would not ask the depositor whether the investment was from his/her pension income or from any other source, he further said.

The PBAs would be exempted from Zakat and subject to withholding tax of 10 per cent of profit on the deposits exceeding Rs150,000. The monthly profit of Rs920 per month on deposit of each Rs100,000 at 11.04 per cent would automatically be credited to the pensioners’ account on the completion of first month.

On an investment of Rs1 million, a pensioner could earn a monthly profit of Rs8,280 and would have to pay Rs920 withholding tax. He said around 4.5 million people have kept their savings with the CDNS at present but it could not be ascertained how many of them were pensioners.

Similarly, rollover of principal amount would be allowed on the completion of maturity period at the terms and conditions prevalent on the maturity date. The pensioners would not be allowed to maintain more than one accounts and if found would be subjected to deduction of profits from the principal amount to avoid misuse of the scheme.

The PBA holders would be allowed premature withdrawals subject to service charges of 2 per cent, 1.5 per cent, 1 per cent and 0.5 per cent of principal if withdrawn before completion of 1, 2, 3 and 4 years, respectively. No service charges on premature withdrawals would be applicable in the 5th year of investment and afterwards.

All the withdrawals, either monthly profit or full payment on completion of 10-year maturity period, would be made through passbooks and withdrawal slips.

Pirzada said the pensioners and their legal beneficiaries would have to maintain PBAs instead of certificates at CDNS centres only and the present terms of the agreement would remain sacrosanct for the whole 10-year maturity period to ensure good rate of return to the pensioners, even in case of changed market conditions.

The DG CDNS said the decision taken by the federal cabinet was to share the benefit of savings the government has earned in the last two year and would earn in the future. In 2001, the CDNS provided a saving of Rs10 million followed by Rs20 billion in 2002. He was not sure about savings in 2003 because these were calculated by end of the year after servicing debt and expenditure.

Pensioners would be the first section of the society because of their old age and services rendered to the country who would share this benefit. Other sections of the society like widows and disabled persons would perhaps be the next to benefit from similar schemes. Total saving stock of the CDNS was around Rs900 billion at present, including more than 30 per cent savings of the institutions like various banks and Pakistan post office.

On debt raising scheme in the UAE, he said the response has been very encouraging because of the stability of the Pakistan rupee and exchange risk benefit to the overseas Pakistanis.

The government has received many requests from other banks (UBL and HBL operated the scheme in UAE) and from other countries like Bahrain, Oman and Kuwait to expand the scheme. It was currently examining as to how to expand and could announce the expansion anytime, he added.