Govt disallows double pension on IMF, World Bank demand

• Pension reforms necessary amid mounting future obligations.
• Centre, provinces' liabilities on pension bill close to Rs40-45tr.
• Pension emoluments to be calculated on 24 months prior retirement.
  

ISLAMABAD: Keeping in line with the demands of foreign creditors, namely the International Monetary Fund (IMF) and the World Bank (WB), the government has imposed a ban on receiving double pension from the national exchequer, The News reported on Thursday.

At present the gross pension is calculated on the basis of last 30 years of drawn salary. However, the government has changed this formula and pension emoluments will now be calculated on the basis of 24 months prior to retirement.

This step has been undertaken by the federal government while ascertaining the fact that the changes in pension are the dire need of the hour because pension liabilities are witnessing a steep surge.

There was a proposal that the employees shall be entitled to a gross pension based on 70% of average pensionable emoluments drawn during the last 36 months of service prior to retirement.

A top official told the publication on Wednesday night that the pension reforms were necessary as the future obligations were mounting just like on the pattern of escalating debt burden. The Centre and four provinces' liabilities on pension bill are estimated close to Rs40 to Rs45 trillion keeping in view the size of the public sector at existing levels.

The Regulation Wing of the Ministry of Finance issued different notifications stating that on the recommendations of Pay and Pension Commission-2020, it has been decided that henceforth, in an event where a person becomes entitled to more than one pension, such person will only be authorised to opt to draw one of the pensions, provided that; (i) where an in-service federal government employee becomes entitled to a pension, such an employee will not be eligible to receive such pension and (ii) the in-service/ pensioner spouse will be eligible for the pension of his/her spouse in addition to his/ her own pay/ pension.

According to another notification for calculation of emoluments for the purpose of pension, it has been decided that pension will be calculated on the basis of average of pensionable emoluments drawn during last 24 months of service prior to retirement.

According to yet another notification, it has been decided that future increase methodology in pension will be as under;

a) The net pension [gross pension less commuted portion of pension] calculated at the time of retirement will be termed as baseline pension. Any increase in pension will be granted on baseline pension.

c) Each increase will be maintained as a separate amount until the federal government decides to review and authorise any additional pensionary benefits.

d) Baseline pension will be reviewed by Pay and Pension Committee after every three years. The current pension of existing pensioners will now be considered as baseline pension. The baseline pension is deemed to include restored commuted portion of pension as and when restored. Existing instructions stand amended with immediate effect, the ministry said.