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| April 21, 2003 | Monday | Safar 18, 1424 |
New pensioners’ benefit scheme full of hassles
ISLAMABAD, April 20: “Relax and enjoy a monthly profit of Rs920”, said an advertisement last month, announcing the government’s new pensioners’ benefit account.
But I.A. Sherwani, the former President of the Pensioners’ Welfare Association, said the advertisement was misleading since a pensioner would get Rs828 not Rs920. Instead of a relief, the scheme had made the pensioners more tense, he said.
Mr Sherwani, who represented the pensioners in the finance ministry for years, told Dawn that the pensioners had been verbally promised a profit rate of 12 per cent, excluding withdrawal tax.
He is representing the pensioners in a suit pending with the Supreme Court. Earlier, he had obtained a positive ruling from the Federal Shariat Court, according to which pensioners in the same grade and with equal length of services were entitled to get same pension emoluments. However, the government appealed in the Supreme Court against the FSC judgment.
Mr Sherwani said he had resigned as honorary president of the welfare association because he was unable to improve the pensioners’ condition.
The number of pensioners’ benefit accounts opened in Islamabad does not exceed three digits despite the fact that thousands of retired government personnel live in the city. It shows that the pensioners’ account scheme has been a disaster, he added.
He said the scheme suffered from a number of limitations and did not suit the pensioners. “The rate of profit is nominal at 11 per cent and is confined to one-time deposit of ten years, during which an account-holder is not allowed to withdraw the amount unless he is prepared to forfeit 4 per cent of the money.”
Besides, the profit is subject to the withdrawal tax, which is a complete repudiation of the time-honoured principle that pensioners are not liable to be taxed. That is why a pensioner would receive Rs8,280 instead of the announced sum of Rs9,200.
Mr Sherwani argued that pensioners received a number of benefits like discounted air and railway fares as well as for making purchases in a number of countries where rate of pension was determined in relation to the prevailing cost of inflation.
He said the World Bank had submitted for implementation a case study of pension benefits but that was gathering dust in the finance ministry with the government lukewarm response to accept the proposal.
A retired government officer, Mohammad Hanif, visiting the G- 9 savings centre, said the government had cheated pensioners. “It is a retrograde measure and would have adverse and negative effects on the government plan for generating domestic savings. The rate of domestic savings is lowest in Pakistan, whereas it is 20 per cent in India and about 50 in Japan.”
A large number of pensioners referred to the finance ministry, which a year ago had suddenly lowered profit rates on the national saving investment schemes.
The largely-held view was that the finance ministry was disdainful of public discomfiture. The pensioners said the public was welcomed to take their investments elsewhere and get a better run for their money.
The officials also withheld public information at that time, that the government would compel other financial institutions to lower profits on their own investment schemes.
A leasing company, which had a published declaration of 17 per cent profit rates, suddenly lowered the rate first to 12 and then to 10 per cent within six months, adversely affecting a substantial number of retired employees as well as widows. Thus, by Jan 2003, the profit rates had come down to 10 per cent on the five-year investments.
Instead of exemption from withdrawal tax up to Rs300,000, this had been further reduced to Rs150,000. Return on defence certificates also dropped to half, with investment doubling in ten years instead of three times, as previously promised.
A retired employee, who closed his corporate sector investment policy last Saturday and signed for the pensioners’ benefit scheme, said the pensioners account was less attractive, full of hassle and wrapped in red tapes.
A number of signatures have to be obtained and a lot of papers have to be attested before a pensioner is admitted to the scheme. ‘Why don’t you accept notary public signature instead of insisting on attestation from government servants? Asked Ashfaque Ali, a retired joint estate officer, in charge of the G-9 national savings centre. He said he had wasted two days in completing formalities.
The difficulty was also faced while depositing cheques. The teller at the centre asked one pensioner to come back after nine days for more details about the procedure, which would begin after the cheque was encashed. He would, then, get the passbook.
“How would he receive the monthly profit amount? “You must come at about 8am on the same date every month and collect a token, after which you would be admitted to the savings centre in accordance with your place in the queue, and the monthly profit emoluments would be paid.”
The officer at the centre kept asking whether the profit rate would remain constant and not lowered as in the case of leasing companies. “How can I trust a government organization which did not even stick to the guaranteed profit rates?”, he said. — Jonaid Iqbal
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