Burden of distributing pension increasing every year

KATHMANDU: The financial burden on the government due to the pensions that it needs to disburse surged by 22 per cent in the last fiscal year 2019/20. The government provides pension to retired officials who were involved with permanent government service.

According to the Pension Management Office, the government spent Rs 53.54 billion on pensions. As per the office, more than 2.65 lakh retired officials have been receiving pension and this number has been increasing every year.
The office also informed that more than Rs 55 billion will be distributed as pension.

However, the government has allocated only Rs 48 billion. According to the Pension Management Office, the Ministry of Finance will provide the required money as per the demand from the office.

The government distributed Rs 44 billion to the pensioners in fiscal year 2018/19. The government has raised the salary of staffers which has further increased the pension burden on the government. In the last fiscal year, the government increased the salary of civil servants by 18-20 per cent.

“When the government increases the salary of staffers the pension burden automatically increases,” said, Muktinath Neupane, chief of the office, adding, “Normally, pension liability increases by five to 10 per cent every year.”

According to the office, the government has distributed Rs 287 billion for pension in the last 10 years, which is more than the total capital expenditure of the last two years.

Contributory pension scheme begins

The government has started contributory pension scheme of government officials who were appointed from last fiscal year. Civil servants, teachers, and personnel of Nepal Army, Nepal Police and Armed Police Force have to contribute six per cent from their monthly income to the contributory pension scheme. Another six per cent will be added by the government.
For the initial stage, the Employee Provident Fund is managing the contributory pension scheme. Government officials will get pension after their retirement from the fund which has been collected under the provision of contributory pension scheme guidelines.
“In the long run the scheme will significantly reduce the burden of pension for the government,” Neupane said.