Sie sind auf Seite 1von 5

1

Class Assignment
PENSIONS, PROVIDENT FUND & GRATUITY

BY FAIZA ZAFAR

PENSION
Pension is defined as a fixed amount, other than wages, paid at regular intervals to a person or to person's surviving dependents in consideration of past services, age, merit, injury or loss sustained, etc.: a retirement pension. Pension is offered under various types of retirement plans.
The terms retirement plan or superannuation refer to a pension granted upon retirement .Retirement plans may be set up by employers, insurance companies, the government or other institutions such as employer associations or trade unions.

Types of pensions
Employment-based pensions (retirement plans)
A retirement plan is an arrangement to provide people with an income during retirement when they are no longer earning a steady income from employment. Often retirement plans require both the employer and employee to contribute money to a fund during their employment in order to receive defined benefits upon retirement. It is a tax deferred savings plan that allows for the tax-free accumulation of a fund for later use as a retirement income. Funding can be provided in other ways, such as from labor unions, government agencies, or self-funded schemes. Pension plans are therefore a form of "deferred compensation".

Social and state pensions/Social Security


Many countries have created funds for their citizens and residents to provide income when they retire (or in some cases become disabled). Typically this requires payments throughout the citizen's working life in order to qualify for benefits later on. A basic state pension is a "contribution based" benefit, and depends on an individual's contribution history. E.g. National Insurance in the UK, or Social Security in the USA

Many countries have also put in place a "social pension". These are regular, tax-funded noncontributory cash transfers paid to older people. Over 80 countries have social pensions. Examples are the Old Age Grant in South Africa and the Universal Superannuation scheme in New Zealand.

Disability pensions
Some pension plans will provide for members in the event they suffer a disability. This may take the form of early entry into a retirement plan for a disabled member below the normal retirement age.

Pension plans

Defined benefits

Defined Contribution

In Pakistan, employees in the govt. sector are provided with pension benefits in no of ways. But in the private sector the scope of such policies is pretty small. Because of economic downfall and unawareness about workers rights, most of the individuals are not able to get such benefits after their retirement.

Old-Age Benefits Act, 1976


The Government of Pakistan had promulgated the Employees Old-age Pensions Ordinance in 1972. However, this was never implemented. Later on, in 1976, this was substituted with an act of parliament, called Employees Old-Age Benefits Act, 1976. This social insurance system was started to achieve the objective of article 38 (c) of the Constitution, which is as under:

The State shall:

Provide for all persons employed in the service of Pakistan or otherwise, social security by compulsory social insurance or other means;

This Act is applicable to the private sector only while Government has created special systems for public-sector employees (where Civil Pension Rules are applicable); members of the armed forces; police officers; and employees of statutory bodies, local authorities, and railways. Other than these, Government is also managing other social assistance programs for the welfare of destitute and needy citizens. Under the Zakat and Ushr Ordinance, 1980, benefits are provided to the poor Muslim citizens of Pakistan while under the Pakistan Baitul Mal Act, 1992 and Benazir Income Support Program Ordinance, 2010 (program was started in 2008); assistance is being provided to all the citizens of Pakistan irrespective of their religion.

Employees Old-Age Benefits Act is applicable on all firms (industrial or commercial, including banks) where 5 or more workers are employed or were employed during past 12 months. The laws remains applicable even if the number of persons employed is subsequently reduced to less than five.

As for the benefits, it provides following four types of benefits to insured persons or their survivors.
y y y

Old-Age Pension (or Reduced Pension) Survivors Pension Invalidity Pension

Old-Age Grant (if an employee is not eligible for pension)

Employees Old-Age Benefits Institution (EOBI) manages implementation and enforcement of this act. EOBI is a semi-autonomous institution working under auspices of Ministry of Labor and Manpower. A tripartite corporate Board of Trustees manages working of EOBI where, along with the Government officials, labor and employer representatives are also present.

PROVIDENT FUND
In PF a small portion of the employee s salary is deducted and deposited with the government PF office and at the time of retirement it is paid as a lump sum to help the employee lead his life peacefully in spite of retirement and loss of monthly.

Provident fund is calculated as a percentage of basic salary and the same will be paid one s employer reduced by contribution to your pension fund. The amount will be refunded along with interest when the employee gets retirement.

GRATUTIY

Gratuity is a scheme to motivate people to serve for longer durations with the same employer. An employee who has served an organization for more than certain number of years is eligible for Gratuity. A portion of his last drawn salary would be multiplied with the number of years of service and paid out to him when he leaves the organization after years of service.