LAHORE: Finding the federal government serious in increasing the retirement age of the public sector employees, Punjab has started paying attention to the issue to avoid imposition of a plan not suitable to it, declaring nevertheless that the idea if followed without proper safeguards would only accumulate the liability of pension and dues, further adding to its financial burden.

The federal government, under directions from the prime minister, had around two months ago sought opinion of its own related departments and all the provinces on increasing the retirement age and the limit for premature retirement to defer its dues and pension liabilities for some years to buy time for tackling Pakistan’s current economic crisis.

Punjab had given its viewpoint in a meeting held in Islamabad, but Khyber Pakhtunkhwa (KP) had, in the meantime, increased the retirement age. Punjab says KP could afford to take the step because of its smaller pension liabilities as compared to the [population-wise] biggest province.

“We need to handle the case very carefully in view of our huge salary and pension bill,” an official source said, adding it would be better to form a uniform policy for the entire country to avoid confusion.

Sources in the Punjab government on Sunday said the notification of a committee by the federal government under prime minister’s advisor on institutional reforms last week to examine the proposal of increasing the retirement age with legal, financial, administrative and organisational efficiency aspects had alarmed the provincial authorities.

They said soon after floating of the idea, a team of senior Punjab government officials had told Islamabad that increasing the retirement age to, say, 63 years from the present 60 years, would merely mean delaying the payment of pension and dues to the civil servants retiring during the period. It could become a crushing burden if the government failed to invest the money saved as a result of the enhancement in the retirement age, they apprehended.

They said the federal government had been conveyed the apprehensions about the misuse of funds spared as a result of enhancing the retirement age for ultimate payment to the officials enjoying additional three years in service in view of the serious economic crisis in the country.

“How would the government arrange funds for payment of pensions and dues after three years, and pay extra salaries to those not allowed retirement from service at 60 during these years is a big question to be asked,” an official said.

“The Punjab government alone pays at present Rs345 billion annually to its retired employees. This is in addition to a huge salary bill -- around Rs 515 billion. Deferring retirement age would mean capping the present pension budget, but paying the stalled money anyhow after three years,” an official said.

Sources said the Punjab had nevertheless asked Islamabad that increasing the age limit for seeking premature retirement could prove somewhat beneficial for the government. Increasing the age limit for premature retirement from the present 45 years to 55 years could save an annual Rs67 billion alone in Punjab, where majority employees, mainly women, overwhelmingly tended to availing themselves of this opportunity.

They said keeping in view all this, the Punjab government was considering to firm up its opinion on the issue probably this week. A committee already formed under the provincial finance minister and comprising Advisor to Chief Minister Dr Salman Shah for the purpose, was likely to take up the matter in a few days.

The committee would also consider the existing pension regime in Punjab and suggest how to reduce the burgeoning pension cost, they added.

It would examine the existing mode of appointment of officers, officials and civil servants in the key departments and suggest alternatives for future appointments that could help reduce the pension bill, also recommending amendments to the relevant laws, rules and regulations.

Published in Dawn, August 26th, 2019