THE EMPLOYEES' OLD-AGE

BENEFITS ACT 1976

Employee Old-age benefit Act 1976 was enforced with effect from April 01, 1976, to
achieve the objective of Article 38 (C) of the Constitution, by providing for compulsory
social insurance. The EOB Act covers all industrial, commercial and other organizations
exempting employees in the service of the state, statuary bodies, police force, armed
forces, railways, local bodies, municipal committees and other local authorities.

REGISTRATION OF EMPLOYERS & INSURED PERSONS UNDER

EOB ACT 1976

It applies to every industry or establishment wherein five or more persons are employed,
directly or through any other person, whether on behalf of himself or any other person, or
were so employed on any day during the preceding twelve months, and shall continue to
apply to every such industry or establishment even if the number of persons employed
therein is, at any time after this Act becomes applicable to it, reduced to less than five.

Through an amendment in provincial employees’ security ordinance, government

included all workers drawing wages up to Rs10, 000 per month under the Social Security
Ordinance.

CONTRIBUTION:
Presently, the Institution does not receive any financial assistance from the Government
for carrying out its Operations. A contribution equal to 5% of minimum wages has to be
paid by the Employers of all the Industrial and Commercial Organizations where EOB
act is applicable. Contribution equal to 1% of minimum wages by the employees of said
Organizations.

RATES:

1- Employer's Contribution @ 5 % of the worker's minimum wage - Rs. 350/= Per Month
2- Employee's Contribution @ 1 % of the worker's minimum wages (i.e. Rs. 7000) - Rs.
70/= Per Month

Total Contribution per Employee - Rs. 420/= Per Month

 BENEFITS/PENSION:
Under EOB Scheme, Insured Persons are entitled to avail benefit like:

1. Old-Age Pension - On the event of retirement.

2. Survivors Pension - In case an Insured Person is expired
3. Invalidity Pension - In case of permanent disability
4. Old-Age Grant - An Insured Person attained superannuation age, but does not
posses the minimum threshold for pension.

Old-Age pension is payable at the age of 60 years for males and 55 years for women. It
is relaxed up to five years in case of persons in employment in the occupation of mining
for at least ten years immediately proceeding retirement.

REQUIREMENT FOR PENSION:

The requirements for receiving pension have been classified under three options. These
are:

• A person should have 15 years of insurable employment if he enters the EOB

Scheme before the age of 40 years;

• A person should have 7 years of insurable employment if he enters the EOB

Scheme between 40-45 years of age.

• A person should have 5 years of insurable employment if he enters the EOB

Scheme at the age of 45 or above.

PENSION FORMULA:

(Avg. monthly wages x No. of yrs of Insurable Employment) / 50

PENSION RATES:

Minimum: RS. 2000/=

Maximum: As Per Formula
 1. OLD-AGE PENSION:
Old age pension is payable to the insured persons working in an establishment, which
maintains superannuating age less than 60 years but not less than 55 years (55 years in
case of woman) which has to be established through documentary evidence.

CALCULATION OF REDUCED OLD-AGE PENSION:

The old-age pension is 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 60 years (55 years
for woman). The minimum old-age pension is also reduced in the aforesaid manner.
The reduced old-age pension is for life and is not restored when the insured person attains
the normal pension age of 60 years.

2. INVALIDITY PENSION:
Invalidity pension is payable to that insured person whose normal earnings have dropped
to one third due to any incapacitation. The other conditions in this regard are that the
degree of invalidity is two third and;

• Contribution in respect of him is payable for 15 years. However, if the insured

person has less than 15 years of insurable employment to his credit but not less
than 5 years and contributions are payable for not less than three years during the
five years preceding immediately his sustainability of invalidity.

• Invalidity pension is not payable retroactively for more than six months

• Invalidity pension is renewed after six months on the medical report. If degree of
invalidity remains more than two third, the pension is continued. If invalidity
pension is allowed continuously to the insured person for five years then he
becomes entitled to invalidity pension for life.

• Invalidity pension commences from the following month that in which insured
person satisfies the condition for entitlement.

• Invalidity pension will be calculated according to the formula for old-age pension.
Minimum pension is anyhow payable to him even if the formula gives an amount
which is less than the minimum pension amount.

3. SURVIVOR'S PENSION:
The requirement for survivors is as follows:

If the old-age or invalidity pension holder dies, the same amount of pension is allowed to
the surviving spouse of the deceased pensioner, and there is no discontinuity of pension
as such. It is just treated as a conversion case. The old-age or invalidity pension is
converted to survivor's pension.

If an insured person dies while in insurable employment and contribution in respect of

him is a payable for at least three years on if an insured person dies while not in insurable
employment and contributions in respect of him/her are payable for at least five years,
minimum pension would be allowed to the surviving spouse.
The survivor's pension will commence from the month following the insured person's
death.

Pension to the Children:

If the deceased pensioner is not survived by a spouse, survivor pension will be allowed
to his minor children and will be distributed among them equally. The pension is payable
up to the age of 18 years to a male child and to the female child till she attains the age of
18 years or her marriage, whichever is earlier.

Pension to Parents:
If the deceased pensioner is neither survived by a spouse nor by children, the pension
will be paid to the parents of the deceased pensioner for a period of five years.

4. OLD-AGE GRANT:
If an Insured person, not otherwise entitled to old-age pension, retires from insurable
employment after attaining the age of sixty years, or fifty-five years in the case of a
woman and a mine worker, and contributions in respect of him were payable for less than
fifteen years, but not less than two years, he shall be 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.