ISLAMABAD: Fear of the National Accountability Bureau (NAB) and pending litigation has hit the performance of the Employees’ Old-Age Benefits Institution (EOBI) as the number of ‘active employers’ registered with the organisation has declined to 84,811 compared to 86,587 in 2013, it has emerged.
It appears that an important institution like the EOBI is not on the government’s priority list since it has so far not appointed any officer as the chairman of the organisation that has been without a head for the last couple of months.
The EOBI was established in April 1976 with an objective to ensure payment of pension or social insurance to either the persons insured with the institution, or their heirs in case of death or disability.
According to the EOBI’s statistics, currently the number of active registered employers is 84,811 and the number of persons insured with the organisation is 8.6 million. Only a decade before, 5.6m were insured with the EOBI.
Investment portfolio of EOBI stands at Rs375bn, mainly because of rise in its properties’ market rates
In 2013, the total number of registered employers was 86,587 and in 2021 the number stands at 130,530.
However, a senior EOBI official said that of the 130,530 registered employers, only 84,811 are ‘active’ as during the last few years 41,685 employers had closed their business and 4,023 had been de-registered.
He said following a suo motu notice by the apex court and subsequent proceedings of NAB, the board of EOBI not only restrained itself from investing in the stock market and properties but it also stopped executing and expediting its ongoing projects.
Since its establishment till 2009, EOBI’s investment portfolio — a set of its financial assets — was Rs149 billion, but it increased to Rs260bn in 2013 and with this pace it was expected that the assets would grow in the years to come.
It was estimated that the EOBI’s investment portfolio would increase at least threefold in 2021, but as of today it stands at Rs375bn.
An insider said that while there was no significant progress in acquiring new assets, or value addition of the existing resources, the EOBI’s investment portfolio increased over the years because of a massive increase in the market prices of its already acquired assets in Karachi and Lahore.
He said the price of Crown Plaza in Islamabad had doubled since its purchase almost 10 years ago.
Besides, the EOBI had earned approximately Rs800 million as rental income from this single property, he added.
In 2013, the Supreme Court had taken suo motu notice of the purchases made during 2012-13 and scrapped the agreements. Some companies had also given up projects with the EOBI.
Interestingly, the then Chief Justice of Pakistan, Iftikhar Muhammad Chaudhry, did not take up the Rs1.44bn purchases made by the EOBI in 2005 in Islamabad’s DHA Phase II extension at an exorbitant price.
However, the EOBI did not get possession of these plots as the area had not been developed yet.
According to an expert, the investment portfolio could only be increased with the value addition of the investment in the assets. The EOBI due to litigation and court cases stopped expanding its balance sheet.
The situation was so fragile that in 2016 then EOBI chairman Sualeh Faruqui while briefing the Public Accounts Committee (PAC) had expressed apprehensions that the organisation would not be able to pay pensions and meet its expenses by 2027 due to depletion of its resources.
When contacted, EOBI spokesperson Naeem Shaukat conceded that litigation had slowed down the functioning of the institution.
However, he added that the cut in the interest rate also adversely affected the huge investments made by the EOBI. He said that the management was taking appropriate measures to put things on the right track.
He dispelled the apprehension expressed by the former EOBI chairman Faruqui and said that he had briefed the PAC on the basis of the evaluation reports prepared in 2016.
He went on to state that the situation had improved and new reports showed that within the available resources, the EOBI would sustain at least for about next two decades.
Published in Dawn, April 26th, 2021