No pension and gratuity for future government employees – Journal

PESHAWAR: The Khyber Pakhtunkhwa Settlement Department has drafted a bill to scrap the pension and gratuity mechanism for future government employees after retirement amid fears that the province’s liabilities in in pensions will reach 300 billion rupees in the next 10 years.

The KP Civil Service Amendment Bill 2022 will be tabled in the Provincial Assembly for compulsory approval after Cabinet approval.

In the draft amendment, section 19 of the KP Civil Service Act 1973, which entitles a retired civil servant to a pension or gratuity, has been replaced by a new section providing for the contributory pension fund for future staff members of public sector ministries and agencies. .

“A person to be regularly appointed to any office or position in the manner prescribed, on or after the coming into force of the KP Civil Servants Amendment Bill 202, shall for all purposes be a civil servant, except for pension and gratuity purposes. , shall be entitled to receive the amount which he has paid into the contributory provident fund, together with the contributions paid by the government to his account in the said fund”, read article 2 of the amendment bill.

Bill prepared for this as government pension liabilities expected to reach Rs 300 billion within the decade

However, persons employed before the enactment of the proposed law will be entitled to the pension and gratuities which are entitled to them under the pension regulations.

A summary submitted for cabinet approval said that due to the huge financial implications of the pension on the provincial treasury, the KP government intends to review the general provident fund and replace it with a contributory pension scheme, as was applicable in 2005 for all new recruitments and assignments.

Furthermore, he noted that in 2002, the then government introduced terms and conditions for contract employees with the aim of reducing pension liabilities.

Under the revised terms of reference, all new recruitments were initially to be on contract for a period of three years, but could be extended by a new contract if necessary. These contractual agents were not entitled to the general provident fund, to retirement and to the gratification and only the contributive provident fund was admissible to them. However, in 2005, through an amendment to the KP Civil Servants Act 1973, all those hired after 2001 were regularised.

Later, the KP Employees (Regularization of Services) Act 2009 stated that the services of persons hired on a contractual and ad hoc basis shall be deemed to have been validly appointed on a regular basis having the same qualification and experience for a regular position.

However, Section 19 of the KP Civil Service Act 1973 was again amended in 2013, in which the right of civil servants to receive pension and gratuities appointed between 2001 and 2005 was restored.

In June 2021, the provincial cabinet had approved the KP Civil Servants Pension Rules, 2021, making major revisions to the pension rules.

The rules had streamlined recipients of pensions to direct dependents and relatives, limiting each recipient to only one pension, whether it was a personal or family pension from the provincial government, and prohibiting active employees from receiving a family pension.

The documents also showed that the Ministry of Finance had asked the provincial cabinet to amend the KP Civil Servants Act to provide a contributory pension fund in the Finance Act 2021, but the cabinet decided not to include the KP Civil Servants Act. proposal in the budget.

The Ministry of Finance, in its white paper for 2021-2022, said the province’s pension bill was estimated at around 92.1 billion rupees for the current year, while pensioners would total 169,358.

The white paper adds that over the past few years, pensions have grown at a compound annual rate of 14.5%, while over the same period the province’s revenue has grown by only 8.1%.

“If this trend continues, wages and pensions will exceed provincial revenues. Pension is one of the main expenditures of the provincial government and the significant rate of increase comes at the cost of a cut in the development budget, as well as non-salary expenditures, which fund infrastructure improvements, school textbooks for school children and essential medicines for patients,” it said.

On the other hand, a Ministry of Finance report citing an actuarial study noted that the pension budget, which stood at Rs 92 billion, was likely to rise to Rs 300 billion over the next decade and would force the provincial government to cut either the pension budget or the development budget.

Posted in Dawn, February 6, 2022

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