• Law minister says move requires legislation
• Telcos’ opposition to SIMs closure proposal rejected

ISLAMABAD: Amid repeated discourse on extensions in the tenures of top officials in key institutions, the government on Tuesday said the proposed increase in retirement age and pension reforms would be across the board for all institutions, including the judiciary, armed forces and civil bureaucracy.

Speaking at a joint news conference, the ministers for finance, law and information said proposals for increase in retirement age and pensions had been discussed by the finance minister-led reform committee constituted by the prime minister as part of structural reforms for expenditure control, but they had not been finalised yet.

“Pension reforms or increase in retirement age for one, two or three years would be across the board,” said Law Minister Azam Nazir Tarrar, adding that these “would be finalised in consultation with the relevant stakeholders — army leadership for armed forces, top judges for judicial organ and government officials for civil service — and would require legislation to change their respective acts.

This comes at a time when reports have been circulating about extension being considered for the heads of the Supreme Court and armed forces.

Finance Minister Muhammad Aurangzeb talked about increasing the retirement age from 60 to 65, saying the life expectancy had improved in the country and these five years were the essence of life-long experience. Also, pension liability would have to be taken through structural reforms over the period so as to gradually bring the burden under control.

He said the macroeconomic indicators had been improving gradually since Prime Minister Shehbaz Sharif signed off a nine-month Standby Arrangement (SBA) with the International Monetary Fund (IMF) and the programme completion had brought back economic stability and investor confidence.

In continuation of such efforts, an IMF team was expected to visit Islamabad over the next 8-10 days so that “we can have a larger and longer programme to give permanence to the macroeconomic stability through structural reforms — increase in tax-to-GDP ratio, energy sector improvement and reduction in the losses of state-owned entities and taking them towards privatisation.

Of these reforms, expenditure control was one of the key areas and pensions had become a big liability for the state to shoulder. Mr Aurangzeb said that before joining the government, he had already increased the retirement age from 60 to 65 years in Habib Bank, saying “age is just a number, 60 is 40 now”.

Azam Tarar said the government would not only benefit from the experience of senior employees, but also help contain a lot of money paid every year as retirement benefit and provide a breathing space from the economic crisis. He said legislation would be required in various acts dealing with different institutions and would be done across the board.

He said he specifically wanted to address certain discussions in the public that there would be exceptions in terms of institutions and grades. “It would be across the board for all, civil service, armed forces, judicial or any other organ of the state as and when a decision is reached and would be done through parliament,” he said.

The finance minister said the economic stability required another IMF programme and this could the last programme only if the government was clear about its actions and policy for the next year and the years after and was able to ensure export-led growth, enough foreign direct investment and return to the capital market for commercial borrowing so that the country could not run out of dollars when it moved into the growth mode.

Mr Aurangzeb said this was being done in consultation with all stakeholders and the federal cabinet was fully onboard on these reforms because the country had reached a stage where it could not afford politics and no more burden could be added to the salaried class.

SIMs closure

The finance minister took exception to telecom companies’ opposition to the closure of SIMs to non-tax filers, saying how could they oppose such steps while their countries had 25-30pc tax-to-GDP ratios when compared to 9pc in Pakistan. “The only thing we want mobile subscribers to be filer when they can pay Rs2,000-3000 monthly bill.”

Responding to a question, he said China was extending support to Pakistan every level, from G2G financial support to commercial borrowing and capital markets and Pakistan was engaged with their central bank, capital markets and commercial banks and would soon be launching panda bonds in the Chinese capital market.

The finance minister expected the policy rate of the central bank coming down in June-July review as inflation was going down and added that at 25-26pc interest rate, fresh investment was unimaginable.

He said the monetary policy committee had itself projected the policy rate going down to 5-7pc by September 2025.

Information Minister Atta Tarrar said a section of the media was speculating that the increase in retirement age was aimed at some specific institutions which was incorrect. He said that for avoiding fake news and propaganda, efforts were being made to take the people onboard on various issues being discussed at government forums. At this stage, various proposals are being discussed and when a final decision is taken, the public would be informed accordingly, he said.

Published in Dawn, May 8th, 2024