EOBI is a service oriented organization. The contribution it collects is invested and the amount received is utilized in meeting pensioners’ liabilities. With the passage of time the number of pensioners and the amount of pension is increasing rapidly. The following table shows the quantum of increase during the last ten years: -

 

	S. No	Activity	June 1993	June 2003	Increase	% Age
	1	No. of active IPs	791,705	11,63,977	372,272	47%
	2.	No. of pensioners	96,045	225,69	129,653	134.99%
	3.	Rate of Minimum Pension (RS)	425	700	27	64.71%
	4	Contribution collected Since Inception (RS in Millions)	4,818.07	19,284.13	14,466.06	300.25%
	5.	Pension Paid Since inception (RS in Millions)	1,549.68	10,415.46	8,865.78	572.1%

 

2.       It is evident from the above figures that contribution collection has increased by 300.25 % whereas payment of pension increased by 572.1%. The liability of the Institution is increasing rapidly due to increase in the number of pensioners and the amount of pension. As the scheme is approaching maturity the number of insured persons (IPs) per pensioner is declining. During last 10 years it has declined form 8.24IPs per pensioner in 1993 to 5.16 IPs per pensioner in 2003.  The Institution was paying Rs.143 million to its 225,698 pensioners in June 2003, in case all insured persons had retired, liability would have been (approx.) Rs.1227 million per month.

 3.       The Institution used to invest its funds in Defence Saving Certificates. The lucrative rates of return ranging from 15 to 19% on DSC provided fiscal space to match increasing liabilities, but Government has now banned institutional investment in these securities and we are left with securities and PIBs allowing 5-7 % return. The financial tightness warrants that we collect every penny outstanding as contribution and link these contributions with the Insured Persons on whose behalf these are received so that only legitimate Insured Persons are paid their pension.

 4.      It has been observed that arrears of Rs 1,731,020,978/- remained uncollected on 30-06-2002. During last two years campaign for recovery of arrears has been accelerated. As a result arrears of Rs 173,974,948/- in the year 2002-03 and arrears of Rs.329,150,086/- upto March 2004 have been collected, most of which has been recovered from the public Sector Companies. It is unfortunate to note that substantial arrears of Rs 394,175,490/- still remain outstanding against closed / de-registered and the establishments which are in litigation and chances of recovery have diminished on account of non –filing of claims by the Regional Heads with the liquidator under Section 39 of EOBI Act 1976 at the time of liquidation or winding up proceedings in case of companies. There are cases where the Institution is paying pension but the employer companies have been wound up without payment of arrears from their assets. Public Accounts Committee has directed the Institution to fix the responsibility for non-filing of claims by the officers at the time of liquidation/ winding up proceedings.  

 5.       All field officers and supervisory officers are therefore directed to ensure that the contribution is realized promptly by imposition of statutory increase @ 2% per months on default of regular payment or payment under Self-Assessment Scheme payable on 15^th of every month automatically. The grace period of 45 days prescribed in circular # 6 is applicable only in case where demand is created under section 12 (3) of the EOB Act 1976. In cases of chronic defaulters provisions of section 13 (2) allowing the authorized officer to recover the amount of contribution alongwith statutory increase as arrears of Land Revenue must be invoked effectively. It has been observed that Regional Heads are enforcing Section 13 (2) by way of attachment of properties etc under Land Revenue Act but the Section 39 of the EOB Act 1976 has not been invoked in certain cases putting collection of arrears in jeopardy.  The Section 39 of the EOB Act is reproduced below: -

 Contributions Etc: -  “ In any proceedings of insolvency against a person or proceedings for winding up of a company, any contribution or other amount payable under this Act by such person or company shall be deemed to be included among debts to be prior to all other debts.”

6.       In view of the above it is advised that the Regional/Zonal Heads should pay special attention to the cases going in liquidation to file their claims and execute recovery on priority under law. They should also keep an eye on the advertisements of Privatization Commission, appointment of Official Assignees of the Courts for sale, privatization, to secure their debts. The figures of the outstanding dues may invariably be communicated to these authorities for payment out of the sale proceeds. It is also re-iterated that the superior courts do not allow recovery of contribution as arrear of land revenue unless it is determined as in cases reported P.L.D. 1962 S.C.384, C.P. No. 1415 of 1992, and NLR 1988. As such, it is imperative that unless there is any order by the Courts for status quo, amounts of outstanding contribution determined under Section 12(3)/33 must be communicated to the establishments periodically to update the position and continuous legal steps should be taken to pursue recovery to avoid conversion of debts into bad debts.

 7.       The Regional and Zonal Heads must review lists of arrears in their monthly meetings guide and assist their subordinates for invoking recovery and filing of claims. We are confident that the field officers shall completely liquidate past arrears upto 30-06-2004 positively besides making arrangements for automatic recovery through record building and automation.

 

                                                                                                          (Muhammad Shafi Malik)

                                     Chairman