May 12: It has become difficult for the government to pay pension to retired employees. The burden on the state is increasing with the increase in the average life expectancy and decline in the working age.

Since the Civil Service Act is not up to date, and government employees who want to continue working and are capable of working within the age limit have had to retire, causing an extra burden to the state coffers.

The average life expectancy of Nepalese was 35.2 years in 1959 and the mandatory retirement age was 60 years. The Civil Service Act, 2049 reduced the retirement age to 58 years as per the recommendation of the High Level Administration Reform Commission formed by the then Prime Minister Girija Prasad Koirala. The retirement age for judges and university professors is higher than this at 66 years and 63 years respectively.

At the time when the Act was promulgated, the average life expectancy of a Nepali had reached 56 years and employees who retired at the age of 60 did not need to be given pension for many years. At the time of promulgation of the Civil Service Act, 2049, it appears that the citizens eligible to enter the civil service were born in the year 2031 (when the period of service entry was set at 18 years). In the year 2031, the average life expectancy of Nepali based on birth was 41 years.

Politics in age limit

According to the sources, the retirement age was reduced via the Civil Service Act to remove some of the high-ranking employees accustomed to the Panchayat System, who refused to help the new government.

Initially, it was thought that it would last only for a short time, but no one took the initiative to change it to 60 years later. The Public Expenditure Review Commission formed under the coordination of Dr Dilliraj Khanal also recommended increasing the retirement age of civil servants to 60 years. As per the report, he said, “In order to reduce the increased liability in pension, the retirement age of all types of public service should be raised to 60 years and only after reaching this age, provision should be made for them to get pension.”

The retirement arrangement has not changed, but the average life expectancy will increase, so the state has to give long-term pensions to those who retire at the age of 58. Now the average life expectancy of Nepalis has reached over 71 years. Experts say that the average life expectancy of those who worked in the civil service is more. The government has to pay pension to them for more than 13 years after retirement.

The number of pensioners increasing

The number of pensioners is consistently increasing. As of April 27, 2023, this number stands at 294,000. This is an average increase of 3,039 civil servants in the last 5 years. Similarly, 2,825 policemen, 2,750 teachers, and 4,320 Nepalese Army personnel have been added as well.

According to Bishnu Prasad Kharel, the head of the Pension Management Office, the additional number of employees who come for pension after taking annual leave is 12,935 on an average, including the army, police, and teachers.

“The average growth rate of the last 5 years is 6.45 percent,” he said.

According to him, last year, the salary of the government employees was increased by almost 15 percent, affecting the pension as well. However, when the budget requested to the government was not provided on time, there was a problem in paying pensions to the retired employees in March and April.

“We did not know that there would be an increase in the salary. Out of the budget of Rs 65 billion requested for pensions, only Rs 52 billion was allocated. As the budget was not enough, we corresponded to allocate more budget. Some amount has been released while some amount is in the process of being released,” said Kharel.