old age benefit

8/18/2019 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

old age benefit

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