ISLAMABAD, May 6: The National Commission on Government Reforms has started assessing the social, psychological and economic impacts of a proposal to enhance the retirement age of civil servants from the present 60 years to 62.
According to sources, the commission is now assessing the impacts of the proposal on creation of new jobs that is directly related to poverty and long-term macroeconomic indicators.
“Our problem is that we create very few jobs every year. We need to create more jobs in order to keep the economic growth sustainable and this is not possible if the old populations keep on working till their graves and new people don’t find vacancies to fill,” a source in the finance ministry told Dawn.
He said the country’s top reform body was mulling the proposal in view of the increase in life expectancy. However, it was also assessing the need for job creation for the 160 million population, a big chunk of which is below the age of 25. Many in the commission think that government servants attaining superannuation age were generally found physically fit and mentally alert to carry on with their official work.
Those retiring from senior grades rarely sit idle. They rather get extensions or seek government consultancies by using their connections, an official at the commission said.
Those who are trying to implement the proposal believe that the enhancement in the retirement age would also help the government reduce its ever-increasing pension bill. Experts engaged to suggest ways and means for reducing the pension bill have reportedly recommended to the ministry of finance to enhance the retirement age.
The sources said the government wanted to follow the examples of some developed countries where healthy lifestyle had increased the life expectancy.
They said nations with the retirement age 60 and above included United Kingdom, United States, Sweden and Norway. In Australia, the retirement age is 67, Japan 65, Singapore and Thailand 62, while China, Korea and the Philippines have fixed the age at 60.
However, an official in the establishment division said Pakistan could not be compared with the rich European nations where the number of old population was increasing rapidly and the birth rate was very low.
In Pakistan, even the government’s family planning policy has failed to stop people from producing more children or making them produce children as per their economic status.
The official said individual choices should be respected on the issue of retirement. While many people would like to work for another couple of years, others may want to enjoy their lives in retirement. Hence, another option is to set up a flexible retirement age. Qualified actuaries had conducted a study on different aspects of the pension scheme after the government was alarmed that the pension bill would surpass all other allocations of the national budget if not rationalised. They had advised the finance ministry to enhance the retirement age to 65.
The pension bill has increased manifold during the last several years. The federal and provincial governments, which pay over Rs47 billion annually to retired military and civil personnel, are exposed to a continuing liability.
The ministry had hired the services of a qualified actuary after the recommendations of the Pay and Pension Committee (PPC). The committee sought the setting up of a post-retirement care office to be headed by an actuary within the ministry of finance to create a reliable database for developing and implementing a strategic plan to reduce government’s pension liability and ultimately managing the entire post-retirement benefit portfolios.
The PPC had suggested that old retirees should continue to be paid under the old rules till such a time as more feasible arrangements could be made. It also asked for an immediate actuarial exercise to ascertain the government’s liability over next 20 years.
To reduce the eventual cost under the first option, the committee had spelled out measures for government’s evaluation like change in pension formula, introduction of early retirement reduction factors, reduction in commutation factor discontinuation of the additional benefits given on occupation related disability, discontinuing the policy of indexing the pension and introduction of 100 per cent commutation of pensions etc.
