SINCE 2005, all senior taxpayers, especially the salaried class, are allowed a tax rebate for contributions made by them to an approved pension fund under the Voluntary Pension System Rules issued by the Ministry of Finance. The tax rebate starts at the age of 40, increasing with age.

There is, however, a serious anomaly in the rules which discriminate severely against people who are 70 and still working. The rules, as presently drafted, define the retirement age as “any age between 60 and 70 or 25 years since the age of first contribution to a pension fund, whichever is earlier”.

Constrained by this rule, the pension funds refuse to accept contributions from the taxpayers once they reach the age of 70, even though they are perfectly willing and able to do so.

This means that, on the one hand, the economy loses the benefit of their investment and, at the same time, senior citizens are denied a tax benefit which was available to them in full when they were younger!

This happens, because for some reason, retirement age has been limited to the age of 70, under the assumption that no reasonable person could ever be expected to continue to work beyond this age. The fact is that in this day and age people can continue to work productively and support their families much beyond 70 and even 80 years.

The anomaly can be corrected easily. All that is required is to replace the words “between 60 and 70 years” in Clause 17 of the Voluntary Pension System Rules, 2005 by the words “after 60 years”. This will allow all the senior citizens of Pakistan, irrespective of their age, to share the benefits of pension fund schemes. As the things stand, there is a huge tax disadvantage for people who wish to continue to participate in economic activity even after attaining 70 and this must be corrected as soon as possible.

I appeal to the Prime Minister of Pakistan to help us.

Saeed Haider

Karachi

Published in Dawn, May 9th, 2019