Burden of pension becoming unmanageable

Financial burden on the state is becoming unbearable due to the rising number of retirees taking pension. The government has to cut development budget as billions have to be allocated for pension to retired staffers every year.

The government has allocated Rs 26.91 billion for pension. Finance Minister Dr Ram Sharan Mahat concedes that the coming years will be difficult for the government as frequent salary hikes also have direct impact on burden of pension. The government had allocated Rs 23.97 billion for pension in the last fiscal year. Amount for pension has increased by three folds in the past five years. The government has to allocate bigger amount for pension for the next fiscal year. Minister Mahat opines that the government can alleviate the pension burden by opting for alternatives of increasing the service period for pension eligibility, creating threshold of age for eligibility or starting a separate pension fund. “The provision of becoming eligible for pension immediately after retirement should be ended as soon as possible. One should at least be 60/65 years to become eligible and there should also be a minimum service period,” he tells Karobar.

The staffers become eligible for pension only after a certain age irrespective of the service period in the majority of countries. The staffers of the United Nations (UN) receive pension only after 55 years. Those who retire in younger age are not given pension as they get employment opportunities elsewhere even after retirement. “The system of giving pension until 80 years (lifelong) on the basis of 20 years of service must end. The service period should also be increased to at least above 25 years as the state cannot bear such a huge financial burden,” he adds. He states that the situation may become unbearable for the state as the pension liability is rising by the year. “There may be crisis due to inability to provide pension if the situation were to continue. The pension fund should, therefore, be made contributory,” he reasons.

Pension fund receives contribution from salary of staffers and the government in many countries across the world, and the staffers receive pension from that fund after retirement. But the burden of pension is becoming unmanageable for the government in Nepal as there is no provision for arranging the money for pension. Mahat stresses on formation of a counterpart matching fund wherein the government should raise the salary for contribution by staffers. He says he had announced such fund when he was finance minister earlier and claims there have been problems as subsequent government did not implement that.

Burden of dual benefits

Taking dual benefits has also become a problem like pension. Finance Ministry officials feel that pension from previous service should be stopped for staffers who join another government service after retirement and want that to be banned by the law. The staffers can now decide whether to take facilities from previous service while using facilities from latest service. The ministry understands that there are very few who are not receiving dual benefits.

Hundreds including Chief Commissioner of the Commission for Investigation of Abuse of Authority (CIAA) Lok Man Singh Karki, commissioner Keshav Baral, Auditor General Bhanu Prasad Acharya, Nepal Rastra Bank (NRB) Governor Yuba Raj Khatiwada and others are currently using dual facilities. “Taking another facility while receiving one is abuse of authority but the trend is rising in lack of clear legal provisions,” a ministry official says. “The state will get long-term benefits if the budget can bring a provision banning dual facilities,” the official adds.

Fiscal Year Pension Amount
2970/71 Rs 26.91 billion
2069/70 Rs 23.97 billion
2068/69 Rs 14.43 billion
2067/68 Rs 14.84 billion
2066/67 Rs 9.92 billion

 

Source: karobardaily