Download - Old Age Benefit
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Old Age Benefts
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Old Age Consequence
• Old age consists o ages nearing orsurpassing the lie expectancy ohuman beings, and thus the end othe human lie cycle.
• They hae limited regeneratieabilities and are more susceptible to
disease, syndromes, and sic!ness.• "o no money source or liing
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#oernment $ole
• %efning Old age benefts&
• The goernment secure the old ageo a person by defning fnancialsolutions in terms o benefts.
• Old age benefts mean the systemsto enable eery citi'en to lead a(orthy lie as a member o culturedsociety
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Old Age Benefts
• The benefts ensure the minimumleel o liing to the needy by publicassistance, and they also promotepublic health and social (elare.
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Beneft
• )mployment *n+ury Benefts
• "ic!ness and ealth-care
• nemployment benefts
• /amily benefts
• $etirement Beneft
• 0ensions
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istory
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istory
• /irst time the " introduced theconcept in 1234 as old-age, suriorsand disability insurance program orthe (elare o their employees.
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istory
The nited 5ation6s %eclaration ouman $ights adopted in the%ecember, 1278 states that&
9)eryone has the right to security inthe eent o unemployment,sic!ness,
disability, (ido(hood, old age or otherlac! o lielihood in circumstancesbeyond his control:
/itti th "t d d ; d l t
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/itting the "tandard ;odel to0a!istan
;andatory"tate 0ension
Occupational
"chemes
*ndiidual
$et. Aor!ers
?
VPS
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#$AT*T?
#ratuity is actually a beneft or sericesrendered in the past. *t is a re(ard o good,e@cient and aithul serice or a substantialperiod o time. Beore 12, gratuity (as paid
by an employer either on oluntary basis or inconsequence o an a(ard by a labor court.o(eer, the =abour =a(s AmendmentsOrdinance, 12 made payment o gratuity alegal obligation. Amendments (eresubsequently made in the "tanding Order 1o >est 0a!istan *ndustrial and Commercial
)stablishments "tanding OrdersD Ordinance12E8. #ratuit is no( a statutor ri ht or
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)OB*
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*ntroduction to )OB*
• )OB Act 12E (as enorced (ith eFectrom April G1, 12E, to achiee theob+ectie o Article 38 CD o the
Constitution, by proiding orcompulsory social insurance. *t extendsollo(ing benefts to insured persons ortheir suriors&
• Old-Age 0ension• "uriorHs 0ension
• Old-Age #rant
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Article: 38
• Promotion of social and economic well-being of the people.—
The "tate shallI
• "ecure the (ell-being o the people,
irrespectie o sex, caste, creed or race, byraising their standard o liing, by preentingthe concentration o (ealth and means oproduction and distribution in the hands o a e(
to the detriment o general interest and byensuring equitable ad+ustment o rights bet(eenemployers and employees, and landlords andtenants
• 0roide or all citi'ens, (ithin the aailableresources o the country, acilities or (or! and
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Article: 38
• 0roide or all persons employed in the serice o0a!istan or other(ise, social security by compulsorysocial insurance or other means
• 0roide basic necessities o lie, such as ood, clothing,
housing, education and medical relie, or all suchciti'ens, irrespectie o sex, caste, creed or race, asare permanently or temporarily unable to earn theirlielihood on account o infrmity, sic!ness orunemployment
• $educe disparity in the income and earnings oindiiduals, including persons in the arious classes othe serice o 0a!istan
• )liminate riba as early as possible
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)mployees Old age pensionordinance in 12 in 0a!istan
$ules
• Completion o G years o serice
• $etirement age (as EG or men and(omen
• Applied to those organi'ations (hohae more than 1GG employees
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)mployees old age pensionordinance in 124 in 0a!istan
• Better scheme (as introduced in 3%ecember 124
• *t (as or industrial , commercial andother organi'ations
• *mplement or those haing at least
ten persons
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employees Old age pensionordinance in 12E in pa!istan
• *t (as substituted by better amendmentson 4th april 12E
• *mplemented rom 1st o +uly 12E
Benefts
Old-age benefts
*nalidity pension in case o disability
Old-age grant"uriors pension
Minimum pension Rs 3
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)mployees OldJage Benefts#eneralD, $egulations, 128G
• *ts is done on the ollo(ing basis&
• Calculation o daily (ages ordetermining Contribution excludingholidays
• ;aintenance o records andsubmission o returns by employers
insurable employment, theiroccupations, (ages, attendance,dates o entry and exit insured
personHs registration numbers D
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);0=O?))" O=%JA#) B)5)/*T"#)5)$A=D, $)#=AT*O5", 128G
• Certifcate o Authority stated by act1D
• 0roo o Age submission odocumentsD
• 0ayment Contributions and liability o)mployer stated in rules and
regulationsD
CERTIFICATE OF AUTHORITY
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Certifcation o Authorityorm
Under Regulation No. 6 (I) of the Employees Old Age Benefits
(General) Regulations !"#$.
No...............
%his is to &ertify that
'r. ............................................... .. hose
photograph and spe*imen signature appear +elo, is here +y
authori-ed.
(a) to reuire an Employer to furnish to him su*h informationJ
as he may *onsider ne*essary/ OR
(+) at any reasona+le tithe to enter any Esta+lishment or otherpremises o**upied +y su*h Employer and reuire any person
found in *harge thereof to produ*e and allo him the e0amine
su*h a**ount +oo1s and other do*uments relating to the
employment of persons and payment of ages or to furnishJ
him su*h information, as he may *onsider ne*essary/
OR
(*) to e0amine, ith respe*t to any matter rele2ant to the
purposes aforesaid the Employer, his agent or any person
found in su*h esta+lishment or other premises *ar any other
person hom the said offi*ial has reasona+le *ause to +elie2e
to +e or to ha2e +een air insured person.
3ignature of Authori-ed Offi*ial
3pe*imen 3ignature KKKKKKKKKKKKKKKKKKKKKKK4la*e KKKKKKKKKKKKKKKKKKKKKKKKKKKK.
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)OB* L =imitations
• )OB* theoretically orms the frst pillar
• There are, ho(eer, some signifcant issues
– Mery limited coerage
– "erious concerns about iability, especiallyollo(ing the (ithdra(al o the#oernment6s fnancial support
• "ignifcant issues (ith respect to
administration o the scheme• *n the past some suggestions hae been
made to conert the scheme into a defnedcontribution one
– ;isplaced concept as the frst pillar must,
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"ocial "ecurity
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"ocial "ecurity
• "ocial security systems proidecountermeasures against the causes orneedy circumstances including illness,in+ury, childbirth, disablement, death, oldage, unemployment and haing a lot ochildren by implementing economicsecurity measures through insurance orby direct public spending.
• These benefts are termed a socialsecurity benefts.
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"ocial- "ecurityComponents
• Old Age retirement- a compulsoryinsurance program designed orretirement benefts or people (ho
pay into the program.
• "uriors benefts- paid to the
dependents o a deceased (or!er(ho is ully insured.
• %isability Benefts- paid to disabled(or!ers (ho meet certain eligibility
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)lderly 0opulation *n0a!istan
"t t i 0l th
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"trategic 0lan o the"ocial "ecurity
Administration
9Adance the economic security o the
nation6s people throughcompassionate and igilant
leadership in shaping and managing
America6s social security programs.:
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"trategic 0lan o the"ocial "ecurity Administration
• !OA"#:
1D%elier high-quality, citi'en-centered serice
D)nsure superior ste(ardship o "ocial
"ecurity programs and resources
3D Achiee sustainable solency and ensure"ocial "ecurity programs meet the needs o
current and uture generations7D ;anage and align staF to support theAdministration6s mission.
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>here does 0a!istan stand on thesebeneftsN
Total social securityexpenditure
(percentage of GDP)
All Countries 14.5%
urope !4."%
Asia #.4%
$ndia !.#%
Paistan 1.1%
Large amount of individua !"iant"ro!"y – not do#umented
Sour#e of $abe % ILO & So#ia Prote#tion & Finan#ia, '#tuaria and Statisti#a Servi#es Bran#" & ())*
http://www.ilo.org/public/english/protection/index.htmhttp://www.ilo.org/public/english/protection/socfas/index.htmhttp://www.ilo.org/public/english/protection/socfas/index.htmhttp://www.ilo.org/public/english/protection/socfas/index.htmhttp://www.ilo.org/public/english/protection/index.htm
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0ensions L The >orld Ban!;odel
Ob+ectie $edistribution "aings "aings
;inimum 0ension Occupational0ension
*ndiidualAccounts
Tax /inanced/ully /unded $egulated
/ully /unded $egulated
;andatory"tate0ension
;andatoryOccupational"chemes
Moluntary*ndiidual$et. A
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*mportance o "ocial"ecurity
• 0oorest 7GP o people oer E4 get8P o their income rom "ocial"ecurity
• ;iddle GP get E7P o their incomerom ""
• )en ater "", more than GP o
(ido(s oer 4 lie in poerty
• )en ater "", (omen oer E4 neermarried hae P poerty rate
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=imitations o "ocial "ecurity "chemes
• *nadequate inormation and data
• =o( coerage o old age and poor population
• =imited outreach to inormal sector
• 0oor management and implementation osocial (elare schemes
• *ne@cient regulatory mechanisms
• /inancial and resource constraints
• =ac! o coordination among diFerentdepartments
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""%
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$hat is ##%&
• ;onthly benefts to coered disabled(or!ers, their dependents, andsuriors
• Coerage extends to spouses,(ido(sersD, dependent children
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Prevalent Retirement Benefit Schemes
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Prevalent Retirement Benefit Schemes
Three schemes prevalentProvident Fund
Gratuity
Pensions
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0realent $etirement Beneft
"chemes
nder the =abor =a( >est 0a!istan *ndustrial and
Commercial )stablishments Act 12E8D proision o
gratuity 3G days6 basic salaryD is a must oremployers
(ith 4G or more 9(or!ers: unless they hae aproident
und scheme
Q 5o protection or non-(or!ersQ 5o protection (here number o (or!ers is lessthan 4G
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0roident /und
%efned contribution scheme
L Contribution as P o salary 4 to
1GPD by employeeL Accumulated in indiidual accounts
L *nestment income credited based
on balanceL*nestment sub+ect to ")C0 regulationno tax on inestment income
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0roident /und
•0ermanent (ithdra(als allo(edduring serice or particular purposes
Q =oans against 0/ balances allo(ed
Q )mployer contribution allo(ed as taxdeductible expense up to 8.33P osalaryD proided scheme approed by
*ncome Tax %epartment
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#ratuity
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#ratuity
• %efned beneft scheme
L =ump sum payable on leaing sericethrough retirement or other(iseD based onsalary normally fnal salaryD and period oserice
Q "cheme normally ununded althoughsometimes unded.
L Contribution to und allo(ed as tax deductible
expenditure proided und approed under*ncome Tax $ules
Q Taxable status o beneft dependent on(hether scheme
L napproed
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M0"
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M0"
• The M0" is an important addition to the pension
rame(or! in 0a!istan.• 0roides an opportunity or &
– *ndiiduals (ho hae no retirement benefts to saeor retirement .
– Topping up o retirement benefts proided by
gratuity and proident und schemes existingmembers o pension schemes excludedD – A simple mechanism or implementing small
occupational schemes L although the defnedcontribution nature may preent larger schemesrom using this mechanism
• The impact (hich this (ill hae (ill largely be basedon a number o actors, including& – Ability to eFectiely mar!et the scheme – $eturns on managed assets achieed oer time
M0" Challenges *mpact
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M0" L Challenges *mpact
• The ma+or challenge o the M0" is that o
eFectie mar!eting< distribution – Charge structure (ill not allo( compliant
products to be mar!eted through a typical lieinsurance sales orce
– 0roducts are more li!ely to be bought ratherthan sold
• *mpact is li!ely to be minimal rom a socialsecurity ie(point
– =i!ely to be ta!en up by aRuent indiiduals – Charge structure again (ill dictate airly largeaerage saings in order or proiders to beable to absorb costs
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0ensions
Th 0 !i 0 i / d
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The 0a!istan 0ension /und00/D
• The 0a!istan 0ension /und 00/D, (aslaunched on 2th Sune GG.
• 00/ is a exible saings plan (hichacilitates all indiiduals (ho are 0a!istaninationals
• it (or!s to sae or their retirement in a
systematic (ay• the saings (ith inestment returns ater
retirement or beore retirement in case oneed.
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0ension
5ormally defned beneft (ith pensiondetermined based on salary normallyfnal or fnal aerageD and period o
sericeL 0ension normally payable romretirement age L lo(er amount
payable on early retirement other thandue to disability
L 0roisions or early beneft on death
or inalidity
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0ension
• "ome defned contribution scheme(ith coerage or death andinalidity
• 5ormally unded
L Contributions allo(ed as deductionor tax up to GP proided scheme
is approed as Approed "uperannotation /und under *ncome Tax$ules
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5umber o )mployees Coered bythe 0ension "chemes
Organi'ationtotal
(otal )ederal %i*isions ++,+
(otal Attached%epartments
/8+,0/3
(otal Autonomous1odies 2G,3G7
1an2ing and )inance total
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g
5ational Ban! o 0a!istan 14,E38
abib Ban! =td. ,112
nited Ban! =td. 17,E34
5ational *nestment Corporation o0a!istan
3G3
(ransport and ommunication
0a!istan TelecommunicationCompany =td.
4E,E3
4ndustr5
0a!-"audi /ertilisers 1,GG4
0a!-Arab /ertilisers 1,G84
)nergy( t l
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gy(otal
67# +/,8
Oil and !as %e*elopmentorporation
,003
#ui 9orthern !as Pipeline "td. 0,8
#ui #outhern !as ompan5 ,3
Pa2istan #tate Oil /,/
9ational re;ner5 "td. +,8
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Conclusion
• #oernment
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Conclusion
• A ery long (ay still to go in ma!ingpensions eFectie as a orm o socialsecurity proision in the country
• The M0", (hile being an important step inpromoting retirement saings, is not reallyexpected to contribute to(ards the socialprotection side
• ;uch needs to be done to strengthen the)OB* scheme and also the occupationalpension rame(or!
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Than!s