Daily Times

Prime Minister Imran Khan’s comment dubbing pension even more serious than that of the circular debt is not in good taste. The government is currently paying Rs 470 billion annually in terms of pensions to retired government employees or their eligible dependents whereas the existing employees are being paid Rs 500 billion as salaries. This is what the prime minister has said to justify the possible ending of pension plans. He cited the examples of universities where pension payments are more than the existing salaries budget. It is true that the pension payments consume a good chunk of the budget but it can be tackled with smart planning. Pension should be paid from an employee’s contribution during their service career and employer’s equal contribution. Public departments’ working is often marred by corruption and inefficiency, otherwise the contributions made by employers and employees and their efficient investment can sustain the mechanism of pension without squeezing the public funds. Over the years, government departments have turned blind eye to the investment factor resulting in growing pension liabilities in every fiscal budget. Right now, federal and provincial governments pay Rs 1 trillion or equal to a quarter of the total taxes collected by the Federal Board of Revenue last fiscal.

The problem of growing pension bills can be found in the exponential growth of government departments’ size. With an increase in population and ensuing development projects, the government has been increasing the number of its departments and employees. The growth in the public sector has brought about a little change to the development scene but has increased wages and pensions expenditures. Side by side, increase in life expectancy keeps the flow of pension payments to employees for a longer time. Moreover, government after government came up with popular decisions such as allowing pensions to a deceased employee’s children for decades. For example, a deceased retired employee’s unmarried daughter is eligible to get pensions for life. Moreover, in every budget, it is binding on the government to increase pension sums so that retirees can sustain the impact of price hike. If the prime minister wants to minimize the pension burden, his government will have to carry out reforms in the government’s structure and working at the earliest. Automation of government’s functions with the help of artificial intelligence can minimize the number of employees. Similarly, hiring third parties for certain tasks will help the government save money. Side by side, a comprehensive social security system should be introduced for the retirees, so that they can have worriless life. *