National bank suspends thousands of pension accounts

There is a whole Pandora’s box that opens up if you look under the stone of government pensions. Be it their defined benefit model, the legal by-pass in their increment method, or just the sheer magnitude which the government is liable for. On top of it, is the whole issue of ghost pensioners. Just in the federal budget for FY23, The annual pensions of federal employees (civil and defence), is budgeted at approximately 600 billion rupees. This is in absence of all non-federal, provincial and State Owned Enterprises’ pensioners. 

In the spirit of addressing this issue and starting somewhere, the National Bank of Pakistan employed an amended method of pension disbursement, called DCS, in 2016. Regular pension payments required people to stand in long queues The system required a biometric verification of the pensioner along with various steps of attestations, making it difficult for ghost pensioners to seep through.

Reportedly, this step did not stop the leakage through the pension fund, as considerably as it should have. The original banking regulation required pensioners to submit life and marriage certificates twice a year to maintain their active status. However, no drastic measures were taken to ensure that submission. This time around the National Bank has taken action and suspended thousands of accounts, conditioned upon these submissions. Until these submissions are verified, these pension accounts will reportedly remain suspended. 

Like anything, this winds up to be a double edged sword. While it might help the bank and the government to filter out fake accounts, a delay in the disbursement of pensions, for a lot of these households, can prove to be a drastic hit on their ability to sustain a livelihood.