ARTICLE 38(e) of the Constitution requires the state to promote the social and economic well-being of the people by “reduc[ing] disparity in the income and earnings of individuals, including persons in the various classes of the service of Pakistan”. Allergic to equality, we have unlawfully and unethically done our utmost to destroy and defy every word of Article 38(e).
We have consistently acted to enrich a small, inept and insatiable class at the cost of pushing millions of hardworking citizens into abject poverty and misery. This is perhaps the single largest reason for our current state of decay and dysfunctionality. Here I explain how we created this mind-boggling inequality and propose a way out by focusing on just one aspect of this disease, ie, Pakistan’s skewed pension system.
Pensions are Pakistan’s biggest unspoken survival threat. The 2023-24 federal pension budget stands at Rs801 billion, far exceeding the budget of Rs714bn required to run the entire civil government.
Completely unmindful of this disaster, the government announced an apparently innocuous (but deadly) ‘political bribe’ by enhancing pensions across the board by 17.5 per cent.
De facto, it resulted in raising the pension of Supreme Court judges (on average) by Rs150,000 per month and of senior bureaucrats by about Rs40,000 but a measly Rs3,500 for those drawing a pension of Rs20,000.
On a parallel note, 65 million Pakistani workers are not registered in any pension scheme at all, and face a demeaning and despondent old age with zero pension. Those few who are registered with the Employees’ Old-Age Benefits Institution receive a pittance of Rs10,000 per month.
When compared to the staggering pension of Rs920,000 or thereabouts the chief justice of the Supreme Court is entitled to, it brings out a ratio of 1:92. Ironically, the same ratio (between the pensions of the chief justice and the least paid employee) in Britain, is merely 1:11. While we admire many democratic norms of the West, perhaps we could also adopt some of their disparity-reducing measures.
The pensions of the rich are padded with layers of gold and silver. Consider, for example, the pension of judges. Besides their already heavy pension of some Rs900,000 per month, retired judges of the superior courts are also entitled to 2,000 units of free electricity, 300 litres of free fuel, 24-hour security (three security guards at Rs33,280 per guard). As if this were not enough, they are also entitled to purchase the official vehicle in their use on retirement at a depreciated value.
The benefits of rich retirees are padded with gold and silver.
Research on the pension perks of judges in advanced and rich countries yielded some startling results. Judges (and other government officials) receive no perks except for a flat transparent pension — to which they also contributed during their service.
When asked under the freedom of information law, the reply of the supreme court of the UK was this: “There are no specific perks or privileges available to retired Supreme Court justices. However, as justices of the Supreme Court they are entitled to be styled as ‘Lord’ or ‘Lady.’
The use of this courtesy title continues after their retirement.“ Should a similar suitable courtesy not be extended to replace the post-retirement perks and privileges of all government officials of Pakistan?
Struggling for survival, Pakistan is crying for reforms in every sector. Start with pensions. No pension must exceed Rs200,000 and no pension must be less than Rs20,000, so as not to exceed the ratio of 1:10. Eliminate all perks both in salaries and in pensions. Eliminate all pensions being currently paid in foreign exchange. Pensions must stop with the spouse and not be extended to the second generation.
Like any other income, pensions too must fall under taxable income. Finally, Pakistan could learn from its neighbour and immediately switch over to a national contributory pension scheme where every employee every month contributes 10pc of his/her basic salary and the amount is matched by the government. Managed by a professional pension trust, that may be the only way to dislocate the mountain of pension, that buries us deeper every day.
Pensions must provide a certain minimum standard of living for every pensioner. They are certainly not intended to provide a lifetime of luxuries to some at the cost of a lifetime of misery to millions of others, who despite having done just as much hard work in their careers are not entitled to even a single rupee of pension.
Our current pension system is seen as accelerating old-age poverty and income inequalities of retirees. Here lies a great opportunity to respond to the call of Article 38(e) and use pensions as an instrument of reducing the devastating disparity and unevenness of our society.
The writer is an industrial engineer and a volunteer social activist.
Published in Dawn, December 5th, 2023