ISLAMABAD - The federal government will pay Rs 2.492 billion on the account of increase in the pensions of Employees Old-age Benefit Institution (EOBI) pensioners from September 2018 to June 2019, it was learnt reliably here Tuesday.

The federal cabinet had already approved 20pc increase in the pensions of EOBI pensioners which will be equally shared by the federal government and the EOBI, official documents available with The Nation said. The decision will help to increase the monthly payment of around 450000 EOBI pensioners from the current Rs. 5,250 per month to Rs. 6,500.

According to the summary, moved by the Ministry of Overseas Pakistanis & Human Resource Development, the cabinet was requested to allow 10 percent increase in the rate of pension of EOBI pensioners as announced by the federal government and further 10 percent increase recommended by Board Of Trustees (BOT) of EOBI to round of the minimum amount of pension to Rs 6500 per month as other benefit in term of section 2(a) of the EOBI act 1976 with effect from September 2018.

During Finance Supplementary (Amendment) bill 2018, the federal government announced 10 percent increase for EOBI pensioners to extend immediate relief. Accordingly financial impact approximately 2.492 billion has been worked out of this increase for period from September 2018 to June 2019. As the number of pensioners increase on monthly basis, Finance Division will also have to allocate and release funds annually on the basis of number of pensioners, said the document.

Furthermore, the Board of Trustee in its 18th emergent meeting held on 26th October 2018 recommended a further increase of 10 percent in pensions and suggested that proposed enhanced amount of pension may be rounded off to Rs 6500 per month to be borne by EOBI.

According to the summary, with the current rate of pension and contribution, the EOBI fund would start depleting in the year 2021 and will exhaust in the year 2029. Previousely the minimum pension was enhanced in April 2014 from Rs 3600 to 5350 per month in terms of Section 2(a) of the EOBI Act, 1976.

The document said that after the 18th amendment in the constitution, the issue regarding devolution of EOBI is yet to be decided by the federal government in consultation with the stakeholders including provincial governments, employers and employees representatives, therefore any enhancement in the current rate of contribution was not possible for EOBI management.

Therefore, EOBI has requested for a grant to be funded by the federal government for the year 2018-19 beside grant on yearly basis until the finalization of devolution process of the EOBI.

The documents said that the finance division agreed to grant Rs 2.313 billion with the view of relief granted in finance supplementary (amendment bill) 2018 pertains to 10 percent increase in minimum pension of EOBI pensioners.

However, the Ministry of Overseas Pakistanis & Human Resource Development requested an increase the amount to Rs 2.492 billion. It was requested that for the term period starting from September till the end of the financial year 2018-19, the federal is required to pay Rs 2.492 billion for its 10 percent share while the remaining will be paid by the Board of Trustees from its owns resources. The federal government will be paying annually on the basis of number of pensioners until finalization of the devolution process.