EOBI has recently announced a 20pc increase in minimum pension amount from Rs5,250 to Rs6,500 despite facing financial obstacles.
EOBI has recently announced a 20pc increase in minimum pension amount from Rs5,250 to Rs6,500 despite facing financial obstacles.

KARACHI: The Employees’ Old-Age Benefits Institution (EOBI) is unable to collect proper and due contribution from the provinces after the 18th Amendment.

The EOBI had been working to achieve the objective of Article 38(C) of the Constitution by providing compulsory social insurance to retired workers for over 40 years in the shape of old-age pension, survivor’s pension, invalidity pension and old-age grant. However, the institution has been facing obstacles in collection ever since the constitutional amendment of 2010 abolished the labour subject from the federal concurrent list.

It is argued that after the 18th Amendment, the EOBI’s authority has been compromised to collect contribution from the employers. Taking advantage of the situation, many big registered employers are making their contribution at various and lower rates, some even at 10-year old rates, confided a senior EOBI employee.

The previous government of PML-N raised the minimum wage to Rs15,000 per month but its implementation under the 18th Amendment remained restricted to the federal capital territory. This deprived employees living outside the capital city from their basic and due right.

On the basis of minimum wages the registered employers contribute up to 5 per cent and 1pc contribution is made by the employee towards the pension fund, said the EOBI official.

He further explained that if Rs15,000 as a minimum wage is taken into account, the accumulative contribution towards the fund by each employee should be Rs900 per month.

Currently there are 122,341 registered employers with EOBI and over 8 million registered employees but majority of the employers are contributing in the range of Rs180-480 and only 783 are giving full contribution of Rs900 per month towards the fund.

He further said that with less contribution and high rate of disbursements, the EOBI’s pension fund was eroding fast and if the situation is allowed to go unchecked the institution would collapse ultimately and many pensioners will no more get their pension.

An expert on social insurance told Dawn that social security of a citizen is the federal government’s responsibility and not a provincial matter. Citing an example, he said that if a person has worked in different provinces, then who would be responsible to pay his social insurance at the end of the day? Even in the United States, the social security is the subject of the federal government and not of states, he added.

Published in Dawn, February 8th, 2019