Government of Pakistan press secretariat establishment division issued office memorandum regarding amendments of pension reform- 2024.
The offer that the government workers shall be entitled to a gross pension grounded on 70 of average pensionable stipends drawn during the last thirty- six months of service before withdrawal will be a matter of concern. For workers who are promoted in the last time of their service. The computation of pension on the average pensionable stipends from the last thirty- six months will place them at a disadvantage vis- Ã - vis others due to the lower average value.
b) The offer at Sr.No. 2 of the draft announcement relating to early withdrawal reduction/ penalty of 3 per time is too inordinate & needs to be redefined as there are cases where the Government retainers have genuine reasons to conclude for early withdrawal.
c) The offer at Sr.No. 8 of the draft announcement relating to periodic increase in pay seem to be lost in the announcement.
3. it’s also applicable to mention that there has been a discussion of adding the age of withdrawal from 60 to 62 in the history as an option to reduce the burden of pension arrears. Finance Division may consider this option to avoid adverse impact of proposed pension reforms on the morale of the Government retainers.
Pension reforms refer to changes or adjustments made to the structure, administration, and regulations governing pension systems. The goal of these reforms is often to improve the sustainability, efficiency, and effectiveness of pension programs. Pensions are financial arrangements that provide individuals with a regular income during retirement, and they are typically funded through contributions made during a person's working years.
Pension reforms can take various forms, and they may be driven by demographic shifts, economic considerations, changing employment patterns, or the need to address financial sustainability issues. Some common elements of pension reforms include:
Changes in Retirement Age: Governments may adjust the age at which individuals can start receiving their pension benefits. This adjustment is often made in response to changes in life expectancy or to address concerns about the financial viability of pension systems.
Shifts from Defined Benefit to Defined Contribution Plans: Defined benefit plans promise a specific amount of income during retirement, often based on factors such as salary and years of service. Defined contribution plans, on the other hand, specify the contributions made to an individual's pension account, and the final benefit depends on the performance of those contributions in the market. Reforms may involve transitioning from one type of plan to another.
Introduction of Auto-Enrollment: Some reforms focus on increasing pension coverage by automatically enrolling eligible workers in pension programs. This is intended to address low participation rates and encourage individuals to save for retirement.
Financial Market Reforms: Changes may be made to the way pension funds are invested or managed to enhance returns and ensure the long-term sustainability of the pension system.
Adjustments to Pension Contributions: Governments may alter the contribution rates for employees and employers to ensure the financial stability of the pension system.
Incorporating Social and Environmental Factors: In recent years, there has been a growing emphasis on incorporating environmental, social, and governance (ESG) factors in pension investment decisions. Some reforms focus on aligning pension funds with sustainable and responsible investment principles.
Communication and Education Initiatives: Reforms may include efforts to improve communication and education around pension planning; encouraging individuals to better understand their retirement needs and take proactive steps to save for the future.
Pension reforms can be complex, and their effectiveness depends on various factors, including the specific context of the pension system and the broader economic environment.
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