Government reduces pension on retirement
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00:00I was shocked to hear this.
00:02It's obvious that Sadaf is saying that I'm jealous of them.
00:06Jealous of me?
00:07The people whose pensions are more than Rs. 16 lakhs,
00:10or some figures have come out,
00:13some have more than Rs. 5 lakhs and some more than Rs. 3,000,
00:17have pensions more than Rs. 2 lakhs.
00:18Look at their numbers too.
00:20Anyway, what is this?
00:21How do you decide on pensions?
00:24And so far, the governments have been expressing concern
00:28that these pensioners are a burden.
00:30We have nothing against them because they have served the country.
00:33But what is this procedure?
00:36In the name of God, the most gracious, the most merciful.
00:38I will tell you a story about Ashfaq.
00:40It's about 2012-13.
00:42This discussion was being held at a table of the Ministry of Finance.
00:45At that time, the burden of pensions,
00:48that is, the federal government was paying in terms of pensions,
00:51was about Rs. 250 lakhs.
00:54At that time, I said in a careful way that it will double in 5-6 years
00:58and will continue to increase in the same way.
01:00Today, when the budget has been presented,
01:02it is Rs. 1040 billion.
01:05Rs. 1040 billion.
01:08The overall expenditure of Pakistan,
01:12whether we are doing it in pensions,
01:14in subsidies, in PSDP,
01:17in the running of the civil government,
01:20in subsidies.
01:21Ashfaq, one thing is that it needs to be evaluated overall.
01:25Because the way it is increasing,
01:27and the quality needs to be improved, we are not able to do that.
01:32In pensions, you retire,
01:34your spouse gets a pension if you don't stay alive.
01:37Then your daughter, if she is married, gets a pension.
01:41Then if you take another job in the government,
01:43you still get a pension.
01:45One thing is that it needs to be cleaned up a lot.
01:47This does not happen in the world.
01:49The second thing that needs to be cleaned up,
01:51and I have always said,
01:52is that we have to take the board of pensions every year,
01:56and we have to finish it on the budget.
01:58This means that their board is also running,
02:00who retired 15 years ago.
02:02That means, we call it, pay as you go.
02:05That is, a part of your pension,
02:06which is deposited in a fund,
02:09that is your reward.
02:11You invest in the market,
02:13invest in national savings schemes,
02:15invest in the bank.
02:18So, the burden has to be reduced by the government.
02:21We cannot reduce it immediately,
02:23because new employees will keep coming.
02:25The real thing is that where the country is standing,
02:27today you should ban new employment in the government.
02:31There is so much burden on the government at the moment.
02:33But doctor, there is one thing,
02:35let's not hurt the feelings.
02:37Because the people who are working there,
02:39in the government sector, their going, their preparation,
02:41from childhood, it is said about a government job,
02:43that of course, their life will be understood.
02:45That is why job security is number one.
02:47After retirement,
02:49there is a lot of concern in the private sector.
02:51There is a lot of concern about what to do after retirement.
02:53So, those who are able to get a job in the government sector with hard work,
02:55they have peace and comfort,
02:57that in the future,
02:59there will be ease for them.
03:01So, the governments should think about this.
03:03Not from today, but from the inception,
03:05how this thing will be managed.
03:07I will add to this, when we say welfare state,
03:09then what are we serving the people in welfare?
03:11If you take the example of other countries,
03:13there is also unemployment allowance.
03:15There are a lot of allowances there.
03:17In old age, you get allowance separately.
03:19You get allowance separately.
03:21And when you have served so much,
03:23you have cut taxes from your salary,
03:25then people should get some in return.
03:27So, Sadaf and Ashfaq,
03:29you have asked such deep questions,
03:31that we will have to do the whole program.
03:33But in a summary manner,
03:35see, one thing is that,
03:37the current employees, their pension cannot be disturbed.
03:39Because that is a contract with the state.
03:41Now, the new employees,
03:43they can be given an example.
03:45Let's say, 10% of what their salary is,
03:47can be deposited.
03:49Partly, the government can pay.
03:51Partly, they will pay.
03:53This happens in the world.
03:55And that will go into a fund.
03:57That means, when they get a lump sum,
03:59it will be far greater than the pension.
04:01I will give you an example.
04:03A government employee uses a car all his life.
04:05You think that,
04:07in the end, he does not get that car.
04:09The government gets that car.
04:11And the expenditure of the car is also more.
04:13Then, you know,
04:15the way it is used, it goes up.
04:17You think that,
04:19we will start giving Rs. 50,000 per month
04:21to that person instead of the car.
04:23Let's say, you lease a car.
04:25On a small scale, Suzuki. On a large scale, Corolla.
04:27This is exactly what I did in the government.
04:29We monetized it.
04:31The effort is that,
04:33all these things are built in your salary.
04:35So that, when you can take home,
04:37you can get a large amount of pension in the end.
04:39Or if it is invested somewhere,
04:41and if you have kept it in the bank,
04:43and you have kept Rs. 1 crore,
04:45and if you are getting a 15% interest rate,
04:47for example,
04:49then you will get Rs. 15 lakhs.
04:51But doctor, there is one more thing.
04:53So, this work,
04:55on behalf of the employees
04:57who are going to retire,
04:59can't the government do it on its own?
05:01That, okay, we have invested
05:03this part of your money here.
05:05From where will you get this money?
05:07And in the end,
05:09you can get the principal amount
05:11when you want to get it.
05:13I mean, just a suggestion.
05:15I am not an expert.
05:17It can be done.
05:19There are managed funds all over the world.
05:21They are run by the governments.
05:23They have also reached the private sector in Pakistan.
05:25Then what will we create?
05:27We call it superannuation.
05:29When you retire,
05:31funds will be created in their name.
05:33Let's say, Sadaf wants to take a risk.
05:35She says, no, I will do it in the stock market.
05:37I want to earn more.
05:39You say, no, I will do it in national savings.
05:41I want to earn only 10-12%.
05:43So, you will use it on your credit.
05:45Since I have worked in Australia,
05:47and Australia's superannuation,
05:49i.e. retirement system,
05:51is one of the best in the world.
05:53There are many such funds.
05:55Like there is a balanced option, a growth option,
05:57a safe option.
05:59So, then your credit is that your money is at your disposal.
06:01For example,
06:03if your life is 30 years,
06:05then you can take more risks.
06:07If your retirement is 15 years,
06:09then you will work.
06:11Those who have 5 years,
06:13they want their money to be balanced.
06:15So, this is what you would call
06:17the actuaries who work in the world.
06:19They have to sit down
06:21and give an order
06:23so that both the pensioner and the giver
06:25can get better.
06:27Doctor, please explain this formula
06:29in which it is being told that
06:3170% of the pension
06:33taken 2 years ago will be given.
06:35This is better.
06:37In the sense that we keep doing this reform.
06:39This is for those
06:41who are in the system at the moment.
06:43How to tie up their pension.
06:45So, that will make them
06:47better off.
06:49I don't think it will make them worse off.
06:51That's fine.
06:53But the real reform is
06:55how the government
06:57has to take the burden
06:59of the pension.
07:01It has to be taken from the books
07:03and taken to the private sector investments.
07:05Let's see how much money
07:07will be there
07:09so that the private sector will get better.
07:11New funds will come to the market.
07:13The government has taken all the burden.
07:15If it keeps increasing like this,
07:17then the pension will increase.
07:19The government has beautifully
07:21transferred the burden to the public
07:23in the form of taxes.
07:25When you reach the retirement age,
07:27your promotion and salary
07:29increases.
07:31If you get a pension
07:332 years ago,
07:35what will you get?
07:37Thank you Dr. Khakhan Najeeb.
07:39Your suggestions are very good.
07:41But you are right.
07:43There needs to be a program
07:45so that the understanding
07:47can be better.
07:49We are not here to hurt someone's feelings.
07:51We are not taking a decision.
07:53The important thing is that
07:55the government should work
07:57for the welfare of the people
07:59and should think about
08:01how these funds can be managed.
08:03There are a thousand ways.