In the realm of social security and retirement benefits, the Employees’ Old-Age Benefits Institution (EOBI) stands as a cornerstone of support for the workforce in Pakistan.
Enacted on the 1st of April 1976 under Article 38 (C) of the Constitution, the EOBI Act has since played a pivotal role in safeguarding the financial future of individuals during their golden years and providing for their loved ones in times of need.
This comprehensive guide will delve into the intricacies of the EOBI Act, covering everything from registration to the diverse array of benefits it offers.
Understanding the EOBI Act
The EOBI Act, a keystone in the landscape of social security, gave birth to the Employees’ Old-Age Benefits Institution. This institution's primary mission is to administer a mandatory social insurance scheme. It is a safety net that comes into play when individuals retire at the age of 60 or, in unfortunate circumstances when they pass away.
Continuous Coverage
Once an individual registers with the EOBI fund while working under a registered employer, they remain a part of this protective network throughout their tenure with that employer. Even if they transition to a new registered employer, their EOBI coverage seamlessly continues.
Registering for EOBI: A Necessity
Employer Registration
As per the EOBI Act, it is a legal mandate for employers to register with the institution within thirty days of becoming eligible for EOBI. This ensures that the workforce they employ is covered by the scheme. After registration, the employer must meticulously list down their employees and ensure that each employee receives their EOBI registration card.
Employee Registration
Employees, too, have a role to play in securing their EOBI benefits. Most often, registered organizations take the responsibility of enrolling their employees once they commence their employment. The EOBI website provides detailed guidelines for employers on registering both new and existing employees. New employees, typically fresh graduates without prior EOBI records, are also integrated into the system.
Contributions to EOBI: A Shared Responsibility
Employers and Employees Contribute
The sustainability of the EOBI scheme relies on the contributions made by both employers and employees. These contributions are made on a monthly basis, with specific rates in place:
- Employers are required to contribute an amount equivalent to 5% of the minimum wage.
- Employees are obliged to contribute an amount equal to 1% of the minimum wage.
All contributions are systematically collected and deposited in authorized branches of Bank Alfalah and the National Bank of Pakistan. Notably, the minimum wage for unskilled labor in Pakistan, as of March 2020, stood at PKR 17,000. However, it is essential to note that the EOBI contribution calculations are based on previous amendments, where the minimum limit was PKR 13,000. This results in a monthly contribution of PKR 130 from employees and PKR 650 from employers, totaling PKR 780 into the pension fund.
Unlocking the Benefits of EOBI
The EOBI scheme offers a variety of benefits tailored to cater to the diverse needs of its beneficiaries. Here are the four primary types of benefits that EOBI provides:
1. Old-Age Pension
This benefit is extended to insured individuals who have completed a minimum of 15 years of service and have reached the retirement age, which is 60 for men and 55 for women. In the mining sector, a minimum of 10 years of service is necessary. The old-age pension is payable for a maximum of 6 months before the claim is made.
2. Survivor’s Pension
In the unfortunate event of an insured individual's demise, a survivor's pension can be granted to their nominees. This includes aged parents and young widows. For unmarried insured employees, parents receive a pension for 5 years after the individual's death. Married employees' widows receive lifelong support from the survivor's pension if the insured person served 3 years with at least 5 years of insurable service overall.
3. Invalidity Pension
The EOBI scheme also provides for individuals who become permanently disabled, compensating for their loss of regular income. Eligibility for this pension hinges on a drop in earnings to two-thirds of the previous income and a minimum of 15 years of insurable employment or at least 5 years of insured service, with 3 of those immediately preceding the injury.
4. Old-Age Grant
Old-age grants are intended for individuals who reach retirement age but do not meet the criteria for a pension claim. The grant is a one-time payment calculated based on the average monthly wage, multiplied by the number of years spent in insurable employment.
Calculating EOBI Pension Rates
The rate of EOBI pension, whether for old age or invalidity pension, follows a specific formula:
Pension = [Average Monthly Wages] x [Number of Years Spent in Insurable Service] / 50
As of September 2018, the minimum pension stood at PKR 6,500, with the maximum amount varying based on the above formula. A significant development to note is the increase in the minimum pension rate to PKR 8,500 from the year 2021. Additionally, EOBI has strategically leased its properties to private owners, aiming to bolster the pension fund further and potentially raise the minimum pension rate to PKR 15,000.
Claiming Your EOBI Benefits
In recent times, EOBI has taken significant strides towards digitalization, simplifying the process of claiming benefits. Individuals who reach the retirement age (60 for men and 55 for women) are encouraged to initiate their claims. Here’s a step-by-step guide:
- Visit the EOBI website at www.eobi.gov.pk.
- Click on "Individual Information" and find your EOBI Registration number using your CNIC.
- Locate your details online; they are now readily available in the online database.
- Submit the required documents for your claim to the nearest local EOBI office.
- You can also post your documents to the Office of Director General (Operations), 3rd Floor, EOBI House (Ex Awami Markaz), Main Shahrah-e-Faisal, Karachi.
After verifying your documents, EOBI will provide you with a Pension Claim form. Complete the form and submit it to your Regional Office. The pension will be granted as swiftly as possible, and within 30 days, a Pension Book/Card will be issued. Benefit payments will be disbursed through designated bank branches, Easy Paisa, or NADRA outlets.
Documents Required for Pension Claim
The documents needed to file an EOBI claim differ slightly based on whether you are claiming the pension for yourself or as a surviving relative of an insured deceased individual. Here’s a breakdown of the required documents:
Documents for Insured Individuals (who are alive):
- EOBI Registration Card PI-03 (if available)
- Certificate/Proof of Employment
- Copy of CNIC
Documents for Insured Individuals (who are deceased):
- EOBI Registration Card PI-03 (if available)
- Certificate/Proof of Employment
- Copy of CNIC
- Nikah Nama of the spouse (Widow/Widower)
- Death Certificate issued by NADRA
- Proof of relationship with the deceased (FRC issued by NADRA)
The EOBI Act, with its commitment to securing the financial future of employees, is a cornerstone of social security in Pakistan.
From mandatory registration for both employers and employees to comprehensive benefits and a straightforward claiming process, EOBI stands as a vital support system for individuals and their families during their twilight years. So, make sure to explore your EOBI benefits and secure your financial well-being for the future.
