Employees' Old-Age

Benefits Act, 1976

SYED MUHAMMAD IJAZ, FCA, LL.B.

PARTNER

HUZAIMA IKRAM & IJAZ

INDEX

CHAPTER – I

PRELIMINARY

1. Short title, extent, commencement and application.2. Definition.

1. Short Title, Extent, Commencement and Application.

It extends to the whole of Pakistan .

It shall come into force at once.

It applies to every industry or establishment.

Ten or more persons are employed-During preceding 12 months

By or on behalf

Even afterward the quantity reduces below ten this Act will continue to apply

Voluntary application by industry or establishment even if employees are below the minimum threshold

Any other industry or establishment notified by FG

2. Definition

In this Act, unless the context otherwise requires

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CHAPTER – II

INSURED PERSON

3. Compulsory Insurance.

4. Administration.

5. Nomination of a body corporate pending establishment of an Institution.

6. Management.

7. Board of Trustees

8. Powers and Functions of the Board of Trustees

8A. Appointment, Powers and Functions of Chairman

3. Compulsory Insurance

All employees in an industry or establishment shall be insured in the manner prescribed by or under this Act

4. Administration

At or after the start of this Act, FG shall nominate by notification An Institution called Old age Benefit Institution (EOBI)

Institution shall be;

A Body corporate

It can own property-Movable or immovable

Shall have a perpetual succession and common seal

Can sue and be sued in its name

5. Nomination of a Body Corporate Pending Establishment of An Institution

Till the establishment of such Institution-FG by notification, can nominate a body corporate with such powers as it may define from time to time

6. Management

Functions/powers to be exercised by the Board (Board of Trustees) viz to be assisted by a Chairman

Federal government can guide Institution on policy matters

7. Board of Trustees

The Secretary or Additional Secretary in the Labour Division, who shall also be the President of the Board of Trustees

Four persons to represent the Federal Government- One each from ministry of finance and labour

Four persons to represent the Provincial Governments, one to be nominated by each of the Provincial Government

Four persons to represent employer,

Four persons to represent insured person,

One person to represent the Institution

Representatives of employers and Insured persons to be chosen from lists of name submitted to FG (Recognized bodies only)

8. Powers and Functions of the Board of Trustees

Approve the

budget estimates,

audited accounts and

annual report of the Institution for submission to the Federal Government

to co-opt any other technical person for a specific purpose and for such limited period as decided by the Board.

8A. Appointment, Powers and Functions of Chairman

Shall be appointed by the Federal Government for such term and on such terms and conditions as it may determine.

Shall exercise such powers and perform such functions as may be prescribed

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CHAPTER – III

CONTRIBUTION

9. Rates and Assessment

9A. Contribution by Government.

9B. Contribution by the insured person

10. Records and Returns by Employers.

11. Registration of Establishment, Etc.

11A. Cancellation of Registration of Establishments etc.

12. Officials of Institution to Check Employer's Books.

13. Increase of Unpaid Contribution and Recovery of Contribution, etc., as arrears of land

revenue.

14. Safeguard of Insured Person’s Right in Default of Payment of Contributions by Employers.

15. Refund of Contributions Paid Erroneously

16. Extinguishment of Claims to Contributions

9. Rates and Assessment.

Employer’s Contribution; 6% of wages-for every insurable employee

No Contribution for – Insured person (male) who has attained age of 60 years and in case of woman 55

years

If wages are not paid- then the Institution shall determine the amount on which contribution is to be

paid

Notwithstanding any contract- Employers are not allowed to deduct or otherwise recover contribution

from employees

9A. Contribution by Government

Federal Government may make such contribution to the Institution as it may determined from time to

time.

9B. Contribution by the insured person

On and from Ist day of July 2001, the contribution shall be payable by an insured person at the rate of [one percent of the wages] in prescribed manners.

10. Records and Returns by Employers

Every employer shall keep such records and shall submit to the Institution such returns, at such times, in

such form, such particulars relating to persons employed by him, as may be provided in regulations.

11. Registration of Establishment, Etc

Before the expiration of thirty days from the day on which this Act becomes applicable, communicate

to the Institution the name and other prescribed particulars of the industry or establishment. Every

insured person may also communicate his name and other prescribed particulars to the Institution.

Under sub-section (1) or sub-section (2) the Institution shall register the name of the industry or

establishment & issue registration card in such from, as may be prescribed

11A. Cancellation of Registration of Establishments, Etc

On the basis of such evidence as the Board may find satisfactory for the purpose, cancel the registration

of any establishment or industry which has ceased to exist, on cancellation of the registration industry

shall not affect its liabilities incurred before the date of cancellation

12. Officials of Institution to Check Employer's Books

Require an employer to furnish to him such information as he may consider necessary

The official referred to in sub-section (1) shall not demand production of account book and other

documents referred to in clause (b) of sub-section (1) for a period of two years from the date of

registration or the 1st day of July, 2005, whichever is later

On expiry of two years’ period, if the employer enhances the number of insured persons by at least ten

percent, it shall be accepted without any question otherwise checking of record shall be done as provided in sub-section (1), by an officer not below the rank of Assistant Director

13. Increase of Unpaid Contribution and Recovery of Contribution, Etc., as arrears of land revenue

If an employer fails to pay contribution on due date, the amount so payable by him shall be increased

by percentage as may be prescribed

Without prejudice to any other remedy, the amount of contribution due, together with the increase

provided for under sub-section (1), may be recovered as an arrears of land revenue.

14. Safeguard of Insured Person’s Right in Default of Payment of Contributions by Employers

Section starts with a non-obstante clause referring to this Act.

If an insured person has informed Institution in due course about his particulars

That person being issued card by the Institute, changes employment and informs the institute of such change in due course

In case of default by employer, the insured shall have and will enjoy same rights as if no default has ever been occurred.

15. Refund of Contributions Paid Erroneously

Every Employer shall be entitle to refund of-

An amount erroneously paid

An amount paid in excess

Only on application of refund within 6 months of the date of payment

16. Extinguishment of Claims to Contributions

Any claims of the Institution for unpaid contributions shall be extinguished in the manner provided in the regulations.

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CHAPTER IV

FINANCE AND AUDIT

17. Employees' Old-Age Benefits Fund

18. Investments and Loans

19. Budget, Accounts and Audit

20. Annual Report

21. Valuation of Assets and Liabilities

17. Employees' Old-Age Benefits Fund

Institution shall have its own fund,

to be called the Employees' Old-Age Benefits Fund

Institute may incur out of fund necessary expenditure

All contributions or moneys to be paid to the fund

Sources of Revenue of Institution

contribution payable,

all other payments made by employer, and

Income from Investments of the money of the Institution

donations & bequests

Assets of the Institute shall solely be utilized for the purposes of this Act

All moneys of the fund to be deposited in banks as may be approved by the Board

18. Investments and Loans

Invest any moneys which are not immediately required for expenses under this Act, and may re-invest or realize such investment.

With the previous sanction of the Federal Government and on such terms as it may specify, raise loans and take measures for discharging such loans.

19. Budget, Accounts and Audit

Institute shall draw budget- Anticipated Revenue and Expenditure- Present it to Board for approval of FG

Institute shall maintain account of Income and Expenditure in the manner prescribed which shall be balanced

on 30th June of every year

Accounts shall be audited by auditors approved by FG at such time and in such manner as may be

prescribed by FG.

Auditors shall have access to documents and records and they shall furnish their report to FG

20. Annual Report

The Institution shall submit to the Federal Government an annual report of its work and activities.

21. Valuation of Assets and Liabilities

At intervals of not more than three years, have an actuarial valuation made in the prescribed manner of its

assets and liabilities and no change in rate of contribution or benefit under this Act shall be made without

proper actuarial valuation.

Provided that FG may direct valuation to be made at such other times as it may consider necessary

22. Old-Age Pension

22-A Old-Age Grant

22-B Survivor’s Pension

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CHAPTER – V

BENEFITS

22. Old-Age Pension

An Insured person Shall entitled to a monthly old-age pension at the rate specified in the schedule. Provided that

He is over sixty years of age, or

fifty-five years in the case of a woman.

Contributions in respect of him were paid for not less than fifteen years

Age shall further be reduced by 5 years in case of person employed in mining

Regular Payments by Insured person himself will not disentitle him of any benefit under this Act, even if the employer defaults in its contributions

An insured person already in receipt of an old-age or invalidity pension, or entitled to an old-age pension under the provisions shall be entitled to a minimum pension at the rate specified in the Schedule.

Person who retired from insurable employment before attaining the age of sixty years but after attaining the age of fifty-five year shall be entitled to a reduced old-age pension on fulfilling through documentary evidence, employer certifies

The old-age pension shall be reduced by one half per cent of the Old-Age Pension specified in the Schedule for each completed month by which the age falls short of sixty years

22A. Old-Age Grant

entitled to an old-age grant payable in a lump sum equal to his one month's average monthly wages for every completed year of insurable employment or part thereof in excess of six months

prior to 30th June 2002 in respect of said word "payable" the word "paid" were not substituted

Employers default will not effect the entitlement if the Insured person himself pays his contributions regularly

22B. Survivors' Pension

In the case of the death while in insurable employment, had completed not less than thirty six months, the surviving spouse, shall be entitled to a life pension equal to the minimum pension

While not in insurable employment but after he had completed five years insurable employment, the surviving spouse, if any, shall be entitled to a life pension equal to the minimum pension.

Who had become entitled to old-age pension before his death, the surviving spouse, shall, if the spouse had married the deceased person before he had attained the minimum age prescribed for old-age pension, receive life pension equal to the pension of such person.

In case of male child, until he attains 18 years of age or in case if female child, until she attains 18 years of age or marriage, which ever is earlier

23. Invalidity Pension

An insured person who sustains invalidity shall be entitled to an invalidity pension at the rate to

be calculated according to the formula set out in the schedule

Subject to regulations, the invalidity pension shall be payable from the month following that in

which the insured person satisfies the conditions for entitlement, invalidity pension shall be

payable so long as invalidity continue

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CHAPTER – VI

PROVISIONS COMMON TO ALL BENEFITS.

24. Calculation of Qualifying Contribution Periods.

25. Benefit Claims and Payments.

26. Extinguishment of Benefits.

27. Suspension of Old-Age Pension and Survivor's Pension.

28. Non-Duplication of Benefit.

29. Benefit nor Attachable, Chargeable Or Assignable.

30. Repayment of benefit improperly received.

31. Institution's Right to Be Indemnified in Certain Cases

32. Recovery of Amounts Due

24. Calculation of Qualifying Contribution Periods

For calculation of period of entitlement (60 yrs for mail and 55 yrs for female) following shall also be deemed to be the contribution periods

Period in respect of which invalidity pensions are paid

Periods of maternity benefit in case of females

Periods in respect of which benefit for injury or sick ness or total disablement is given under Social Security Ordinance

25. Benefit Claims and Payments

Claims to be made in writing in the manner prescribed in regulations

Payments to be made in the manner prescribed in regulations

26. Extinguishment of Benefits

A right to any benefit shall stand extinguished where a claim therefore is not made within twelve months of the date on the benefit becomes payable

Institution may condone the delay and admit the claim if it is satisfied that the delay was caused for reasons beyond the control of the insured person or the survivor

27. Suspension of Old-Age Pension and Survivor's Pension

Payment to Insured person or survivor is to be suspended as long as he/she is absent from Pakistan Exceptwhere regulations provide otherwise.

28. Non-Duplication of Benefit

Shall not be paid for the same period more than one of the benefits, person is entitled to more than on benefit, he shall be given the higher of such benefits

Person is entitled to a benefit under this Act & to a disablement pension under the West Pakistan Employees' Social Security Ordinance, 1965, he shall be given the higher of the two.

Shall not be payable to a person so long as he receives the sickness benefit under the West Pakistan Employees' Social Security Ordinance, 1965

29. Benefit Not Attachable, Chargeable Or Assignable

shall not be liable to attachment in the execution of a decree, nor shall it be chargeable or assignable

any agreement to charge or assign a benefit shall be void, and on the bankruptcy of a person, the benefit payable to him shall not pass to any trustee or person acting on behalf of his creditors.

30. Repayment of benefit Improperly Received

When a person has received any benefit under this Act to which he is not lawfully entitled, he shall be liable to repay to the Institution

Sums due to the Institution by virtue of the foregoing sub-section may be recovered by deduction from a benefit payable under this Act.

Institute may waive recovery of a benefit if such recovery causes hardship and payment was made due to any misinterpretation of any provision of this Act.

31. Institution's Right to Be Indemnified in Certain Case

Creating a legal liability in some person, the Institution shall be entitled to substitute itself for the insured

person in bringing a suit for damages against that person.

32. Recovery of Amounts Due.- Any amount recoverable under this chapter may be recovered as an arrear of land revenue.

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CHAPTER – VII

DETERMINATION OF QUESTIONS AND CLAIMS

33. Decisions of Complaints, questions and disputes.

34. Review of decision

35. Appeal to Board.

36. Assessment of invalidity

33. Decision on Complaints, Questions and Disputes

Institute shall decide in matters pertaining to-

Any complaint is received or any question or dispute arises as to, Whether a insured person, amount of wage, amount of contribution, entitlement to any benefit, registration of industry or establishment

Institution shall notify its decision to the person concerned in writing, stating therein the reason for its decision.

34. Review of Decisions

On new facts being brought to its notice, review a decision given by it under section 33.

No decision shall be so reviewed without giving the person concerned an opportunity of being heard and adducing evidence in support of, or against, the decision, as the case may be

35. Appeal to Board

May appeal to the Board if the person is aggrieved by decision under s33 & s34

36. Assessment of Invalidity.

The Institution shall appoint medical boards which shall, in such manner as may be provided by regulations, assess the degree of invalidity sustained by an insured person.

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CHAPTER – VIII

OFFENCE AND PENALTIES.

37. Offences.

38. Prosecution.

37. Offences

For the purpose of obtaining benefit

Knowingly-Makes false statement or false representation, fails to pay any contribution, fails or refuses to submit any return

Obstructs any official of the Institution in the discharge of his duties

Shall be punished with imprisonment for a term which may extend to two years, or with fine which may

extend to ten thousand rupees, or with both.

38. Prosecution

No prosecution shall be instituted except with the previous sanction of the Federal Government or any

office or authority

No court inferior to that of a Magistrate of the first class shall try any offence under this Act.

No court shall take cognizance of any offence under this Act except on a complaint

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CHAPTER IX

MISCELLANEOUS

39. Contributions etc

40. Exemption From Stamp Duty

41. Exemption From Taxes

42. Member and servants of the institution to be public servants

43. Delegation of Powers

44. Power to make Rules

45. Power to make Regulations

46. Power to exempt.

47. Act not to apply to certain persons.

48. Repealed Schedule

39. Contributions Etc

Any proceedings of insolvency against a person or proceedings for winding up of a company, any contribution or other amount payable such person or company shall be deemed to be included among debts to be paid in priority to all other debts

40. Exemption From Stamp Duty

Stamp duty shall not be chargeable upon any documents used in connection with benefits payable under this Act.

41. Exemption From Taxes

Notwithstanding anything contained in any other law, FG by order in writing, exempt the Institution from any tax, duty, or rate leviable by the Federal Government or by a local authority under the control of the Federal Government

42. Member and Servants of the Institution to Be Public Servants

Members and employees of the Board and all officers and servants of the Institution shall be deemed to be public servants within the meaning of section 21 of the Pakistan Penal Code

43. Delegation of Powers

Board may direct that all or any of its powers and functions may, as may be specified, be also exercisable by any officer or authority subordinate to the institution.

44. Power to Make Rules

The Federal Government may, subject to the condition of previous publication in the official Gazette, make rules to carry out the purposes of this Act

In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters

Tenure of members of Board (other than president) and other terms and conditions, rules, quorum and numbers of members

Mode and manner of appointment of members of board

Fee and benefits of the members of Board

Time, rates and manner of contributions

Time, rate and manners of arrears of contributions

Investment of surplus funds, realization of investments and reinvestment

Mode and manner of budget of the Institute

Forms of accounts of the Institute

Time and how such accounts be audited

Matters to be included in annual report

Time in which claims of benefits are to be made

Manner and procedure for disposal of appeals

Any other mater which is required or as may be prescribed

45. Power to Make Regulations

The Board may, subject to condition of previous publication, by notification in the official Gazette, make regulations not inconsistent with the provisions of this Act or the rules.

In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any

Time place and manner of meeting of Board

Determination of contribution of wages for calculation of contribution payable

Records to be kept and returns to be submitted by the employers

Manner and mode in which unpaid contributions may be extinguished

Powers and duties of Internal auditors

Forms of claims and documents to accompany them

Manner, mode and time & place of payment in respect of benefit

Manner and mode and time in which appeals are to be decided

Manner and mode of review

Method of payment of contribution and liability thereof

Manner and mode of assessment of invalidity

Proof of age for the purposes of this Act

Manner in which services of the Institute shall be organized

Any other matter not provided for under this Act or rules made under this Act

46. Power of Exempt

The Federal Government may, subject to such conditions as it thinks fit to impose, by

notification in the official Gazette, exempt any establishment or industry from all or any of the

provisions of this Act.

47. Act Not to Apply to Certain Persons

Persons in the service of the state, including members of the armed forces, police force and railway servants, local

council, a municipal committee, a cantonment board or any other local authority

Service of Water & Power Development Authority, service of a bank or a banking company etc

48. Repealed

Repealed by Ord. XXVII of1981,s.3 & 2nd Schedule.

SCHEDULE

Monthly rate of old-age pension formula :- Avg monthly wages x No. of years of employment

Six months period shall be treated as one full year

No account shall be taken of period after one becomes entitled to OAP

Average monthly wages shall be calculated on 12 calendar months immediately after fulfilling the conditions specified in sec 23

Old-age pension shall or invalidity pension, shall not be less than one thousand rupees per month commencing or after the first

day on January, 2005.