Nepal | May 27, 2019

Govt to spend Rs 45bn on pension this fiscal

Plans to launch contributory pension scheme

Sabin Mishra

Kathmandu, September 3

The financial burden on the government to manage pension amount for retired government officials has grown significantly. The pension amount being distributed to former government officials who have successfully completed their tenure has doubled in the last five years.

The government estimates that it will need to spend Rs 45 billion to pay pension to retired state officials in the current fiscal. This amount is 3.52 per cent of the total budget allocated for the current fiscal, which stands at Rs 1,278.99 billion.

According to the Ministry of Finance, the pension amount has increased by 100 per cent in the last five years; the government had spent Rs 22 billion in fiscal 2013-14 for the purpose.

The government had spent Rs 37.10 billion in fiscal 2016-17 on pension. The total pension amount increased by 37.82 per cent in fiscal 2016-17 against the previous year’s Rs 26.92 billion. In fiscal 2015-16, the government had raised the monthly salary of civil servants by 25 per cent due to which there was an increase in the amount of pension disbursed. As per data maintained by MoF, the government had spent Rs 26.1 billion on pension in fiscal 2014-15.

Looking at the huge burden that pension distribution was having on the government budget, the finance ministry has submitted a draft bill of contributory pension scheme to the Cabinet for endorsement. The bill will be presented in the Legislature-Parliament after it is endorsed by the Cabinet.

According to Shishir Kumar Dhungana, revenue secretary at MoF, the government is in the final stage of endorsing the bill. “Pension is turning out to be a challenging issue for the government, so we have tried to introduce the contributory pension scheme,” he added. “This programme will come into effect nearly 20 years after it was endorsed by the Parliament.”

Under the contributory pension scheme all the civil servants will have to put aside 10 per cent of their monthly salary for their pension. The government will also contribute a certain amount to create the fund.

Pension liability and increase in other recurrent expenditures have been affecting the government’s capacity to spend on development projects, capital formation and employment generation programmes.

According to pension management office, 236,000 former government officials are getting monthly pension from the government.

The government has been providing pension to civil servants based on total years in government service multiplied by the salary scale that the official received at the time of retirement divided by 50.


At a glance

  • The pension amount has increased by 100 per cent in the last five years; the government had spent Rs 22 billion in fiscal 2013-14 for the purpose
  • The amount is 3.52 per cent of the total budget allocated for the current fiscal, which stands at Rs 1,278.99 billion
  • In fiscal 2016-17, the government spent Rs 37.10 billion on pension
  • In fiscal 2015-16, it spent Rs 26.92 billion on pension
  • In fiscal 2014-15, it spent Rs 26.1 billion on pension

 


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