ISLAMABAD-The feder al government on Monday has reconstituted the Pay and Pension Commission by appointing former federal secretary Nargis Sethi as its chairperson.

“The Prime Minister has been pleased to appoint former Federal Secretary Ms. Nargis Sethi as Chairperson of the Pay and Pension Commission with immediate effect,” said a notification issued by ministry of finance yesterday. The federal government has appointed Ms. Sethi as Chairperson of the Pay and Pension Commission after Wajid Rana had resigned from the post.

In April this year, the federal government had constituted a “Pay and Pension Commission” tasked with evaluating salary structures of employees of both federal and provincial governments including the armed forces. It was constituted to end the disparity between salaries of employees of the same grades in different departments and to review the need for a further increase in salaries. The new commission was also supposed to review the pension system. The commission was required to highlight the existing distortions and anomalies in the pension scheme and recommend remedial measures, according to the terms of references. The commission was empowered to review the existing incentive regime and to recommend improvement in it.

The government had appointed Wajid Rana as chairman of the Pay and Pension Commission. However, Commission Chairman Abdul Wajid Rana and one of the members from Sindh disassociated themselves from the commission in July this year. The six-member commission was headed by former finance secretary Abdul Wajid Rana with Its members Nazar Hussain Mahar, a retired bureaucrat, Dr Noor Alam, also a retired civil servant, Seema Kamil, President United Bank Limited, Zubyr Soomro Chairman National Bank of Pakistan and Nausheen Ahmad of ICI Pakistan Limited. The commission had not held a single meeting since its constitution.

It is worth mentioning here that Prime Minister Imran Khan had said the issue of pensions was even more serious than the circular debt and the problem must be resolved in a planned and organised manner. “The government is paying Rs470 billion on account of pensions. This amount is almost equal to the Rs500 billion that we pay to the existing government employees as salaries,” the PM was quoted as saying during a cabinet meeting. 

The government has been left with no other option but to introduce a contributory pension system. The Pay and Pension Commission was supposed to finalise its report in six months till October 2020. However, when its head resigned, the process was delayed.

According to the report, International Monetary Fund (IMF) has projected Pakistan’s Net Present Value (NPV) of pension spending to go up by a whopping 10.9 per cent of GDP in the next 30 years till 2050. The NPV is the calculation used to find today’s value of a future stream of payments. The pension bill had already ballooned and stands at Rs470 billion for the current fiscal 2020-21, equivalent to slightly over 1 percent of GDP. The pay and pension bills have come close and now the pension bill is all set to exceed the salary bill at federal levels. In totality, the pension bill at federal and provincial levels had crossed Rs1 trillion mark and is set to exceed manifold in the years to come.