Accurate accounting and record keeping is the key to confidence building and foundation for success of a pension fund. Realizing its importance, the Institution has strived for building up database of insurable establishments, cleansing of arrears and updating the database of the employees or insured persons (IPs). Despite continuous efforts, we have still not reached our destination.  There is a huge gap between the registered and active employers, a large amount of arrears is outstanding which still does not fully match with the reported figures in MPRs and new employers are being registered without registering names of particulars, their employees (IPs) simultaneously.

 2.       It is, therefore, essential that all of us i.e. beat officers, Regional Heads, Zonal Heads and Divisional/Departmental Heads realize the importance of cleansing of record and continue to review and improve accounting and record building.  As you are aware, the Institution has already launched following initiatives to modernize its accounting and record keeping system:-

         a)       Adoption of Accrual System of Accounting.

         b)       Gradual shifting to flat rate system culminating in Definite Progressive Flat-Rate Pension

                   System.

         c)       Adoption of Self-Assessment Scheme.

         d)      Adoption of Information Technology and Networking.

             e)      Regular capacity building training programmes to improve knowledge & skills of manpower to

                      operate modern systems.

 3.       The transition from existing to modern system requires intensive efforts to clean and update employers and employees database, collect, liquidate and report correct arrears. It has, therefore, been decided to consolidate the instructions on the subject mentioned above to re-emphasize the importance of the task, provide guidelines for field and supervisory officers to realize the objective and enforce accountability in case of failures.

 GAP BETWEEN REGISTERED AND ACTIVE EMPLOYERS:

4.       We are reporting 52,260 registered & 33917 active employers and 2,074,425 registered & 1,254,760 active insured persons as on 31^st March 2004.  The gap between registered and active employers and Insured Persons is reportedly on account of closure of units, duplicate registrations, migration of employees to uncovered sectors, death or conversion into pensioners.  It is evident that process of de-registration despite improvement has not succeeded in clearing the backlog of quarter of a century. The task of de-registration of closed units has been decentralized to Region’s level. Latest instructions on the subject have been circulated in continuation with older ones through various communications recapitulated below for convenience of all concerned:

          I.              FO/HO/VR/MAK/86 dated 02-02-1988(Annex-I).

II.              HO/B&C/29/1/89/1040 dated 10-01-1991(Annex-II).

III.             HO/B&C/23/1/89/1912 dated 16-07-1991(Annex-III).

IV.             Circular #HO/B&C/23/8/93/1410 dated 15.11.2003(Annex-IV).

V.              Circular #HO/B&C/B&C/23/8/93 dated 16.04.2004(Annex-V).

VI.             Circular #HO/B&C/23/8/93/694 dated 08.05.2004(Annex-VI).

 5.       The position has been reviewed at highest level and it has been decided to give utmost importance to this task and monitor progress at BoT level. The Regional Offices shall provide lists of closed and inactive units indicating the units to be deregistered latest by 31^st May 2004.  Regional Heads shall simultaneously complete the process of de-registration of these units in the light of instructions mentioned in paragraph # 4 above.  The closed units shall also be got verified by the Labour Departments and authenticated by a team including Members of the Board.  While checking the unit’s authenticity and correction of the record of employers shall also be verified in the light of the Circular #HO/B&C/72/1/02/248 dated 25.03.2004 (Annex-VII).  In cases where arrears are outstanding, recovery from liquidation proceeds in case of liquidated companies, assets of closed establishments shall be ensured.  It shall be certified by Regional/Zonal Heads that all possible recovery measures had been exhausted and there was no ray of hope left.  The waiver of arrears shall be made in compliance with the instructions issued vide Circular No.06/2003-04 dated 23.02.2004(Annex-VIII).

 GAP BETWEEN REGISTERED AND ACTIVE INSURED PERSONS:

6.       As mentioned above, there can be many reasons for the gap between registered and active Insured Persons. The beat officers/Data Entry Officer at the Region shall complete the entries in the Pension Registers and computer so that all the IPs who have become Pensioners shall be identified in the database.  In the meantime EDP Department shall develop software to shift these records from the database of the IPs to that of pensioners regularly.  EDP Department shall develop software to identify duplicate records and their consolidation against the latest EOBI number issued to the same persons.  This will leave us with two list of the insured Persons namely, (i) who are in the system (ii) who are out of the system. After identification of the names of the IPs with active employers after entry of form PR-02A/PR-02, the computer system shall identify the IPs who have gone out of the insurable employment. The verification of facts regarding new engagements of IPs going out of ambit of insurable employments shall be made by Regional Heads through correspondence at their permanent home addresses recorded on their computerized national identity card or PE-01. This exercise must be completed by the end of June 2004 so that new year’s targets are based on the active insured persons.

 REGISTRATION OF NEW EMPLOYERS:

7.       It is believed that with the current coverage based on database constructed through map survey, EOB Scheme has reached the maturity level.  There shall be regular updating of database regarding companies/firms from registration authorities.  It has therefore been decided that no establishment shall be registered without concrete evidence that it is employing ten or more employees.  The evidence shall be obtained from Labour Department, Industries Department, Employers/Employees Federations and Associations, Social Security Department etc.  While obtaining the PR-01 form for registration, PR-02A for PE-01 for individual employees shall also be obtained PI-02 & PI-03 card shall be issued simultaneously. The illustrative list of possible sources of information is placed as Annex-IX.

 MONITORING OF RECOVERY OF ARREARS AGAINST PUBLIC AND PRIVATE SECTOR DEFAULTERS:

 8.       It has been observed that in spite of clear instructions issued vide Circular #11/2002-03, 14/2002-03, 06/2003-04 and a number of letters, progress in cleansing of arrears and maintenance of Employers’ Ledger Accounts (ALR) is not visible from the Monthly Progress Reports (MPRs).

 9.       The Institution has to report position of arrears in its quarterly and annual accounts as recoverable.  To avoid adverse inference by auditors, it is imperative that the receivables should be substantiated with list of arrears showing recovery efforts made and prospect of its recovery in near future.  The value of transparency and professionalism warrants that correct arrears duly supported by the lists of arrears are reported in the Monthly Progress Reports (MPRs).  The collection out of arrears be deducted and statutory increase or demand not paid during the year be added to keep accurate record.  This exercise has assumed tremendous importance on account of adoption of accrual system and automation in accounting and record keeping.   In order to modernize account-keeping, preparation of detailed statements of outstanding arrears and their updating on monthly basis has been made mandatory for all Regions.  You have been asked to send the detail of the outstanding arrears as on 31^st March 2004 vide letter No.HO/B&C/6/3/93/635 dated April 22, 2004 (Annex-X), which is still awaited.  Please get it expedited and ensure submission of lists with the Monthly Progress Report for May 2004.

 10.     It has also been decided that henceforth details of outstanding arrears shall be attached with MPRs as Annex-I and Annex-II on permanent basis.  The consolidated figures of the MPR Annex-I and MPR Annex-II must match and be reconciled with the figures of the outstanding arrears and recoveries made during the month as shown in the MPR.

 11.     The revised Annex-I and II are enclosed.  These annexures replace the previous annexures sent as attachments of Circular # 14/2002-03. The Auditors and Inspection authorities shall check the accuracy of arrears reported in the update list of arrear, MPR annex-I & MPR annex-II, Arrear Ledger Register and comment on heir correctness/accuracy through special inspection which shall be undertaken by them in the month of July each year besides quarterly inspections.

 12.     Preparation of the statements as per the revised annexures shall be a one-time job and in the following months only their updating shall be required.  It is, therefore, desired that the first statement may be sent alongwith a diskette. This will help us in maintaining the details of arrears and would be a sound basis and tool for the Zonal Head to monitor recovery of arrears. All Regions and zones shall maintain update record of arrears and regularly monitor their recovery and/or liquidation.

 13.     The target date of submission of the MPR i.e. 7^th of every month may also be adhered to.

 

                                                                            

                                                                                                       

                                                                                     (Muhammad Shafi Malik)

                                                                                                  Chairman

 

All Divisional/Departmental/Zonal/Regional Heads( for strict compliance and enforcement)

Copies: All Members of BoT for information.