What is EOBI and How Can You Claim Your Pension?

IN THIS POST:
– What is EOBI?
– How to Register for EOBI?
– How Are Contributions Made to EOBI?
– How Can EOBI Benefit You?
– Rates of EOBI
– How to Claim Your EOBI?
– Documents Required for Pension Claim

UPDATE (Feb.8, 2021): In a move to curb ghost pensioners, the State Bank of Pakistan (SBP), in accordance with the government’s new policy, has instructed banks to replace life certificates with biometric verification of pensioners twice a year.

“Pensioners will be req­u­ir­ed to undergo biometric verification from any bra­nch of a bank maintaining his or her pension account, every year in March and September,” according to a SBP circular issued to banks.

At the age of retirement and want to claim your pension from the government? Unaware of the processes and afraid of the hassles involved? Well, we’re here to guide you on how to claim your pension, but first, let’s discuss what is EOBI, how contributions are made to the fund, and what benefits it offers for retirees.

What is EOBI?

The EOB Act came into effect from the 1^st of April 1976 as part of Article 38 (C) of the Constitution, resulting in the formation of the EOBI, which stands for Employees’ Old-Age Benefits Institution. The organisation manages a compulsory form of social insurance that can be claimed by all registered individuals upon retirement after the age of 60 or by their survivors upon their passing. The institution ensures not just the collection of contributions from both employers and employees but also works towards the identification and registration of employers (both corporations and industries) and insured professionals.

A person who gets registered with the EOBI fund once remains a part of it as long as they are working with a registered employer. Upon leaving their current employment, they will once again be included in the fund as soon as they begin working with another registered employer.

EOBI pension can be claimed by an individual if they cannot continue working due to old age, invalidity, or death. It ensures a definite and continuous source of income for such individuals or their family members upon their demise.

How to Register for EOBI?

Both employers, as well as employees, need to be registered in the EOBI database to benefit from the fund. Here’s how it works:

Registering as an Employer for EOBI

As per the law, all employers must register themselves with the organisation within thirty days of becoming eligible for EOBI. Once the company is registered, they must list down their employees, and ensure that each individual receives the registration card from the institution.

Applicability of the EOB Act 1976

It is important to note that as of July 2008, a company becomes eligible for EOBI registration when it has 5 or more employees. But companies having fewer than 5 employees can also voluntarily opt to be included in the EOBI scheme.

All companies, irrespective of industry, are bound to participate in the scheme, except for employees of the state, police personnel, armed forces personnel, statutory bodies, local bodies, railway line employees, municipal committees, and other local authorities.

Registering an Employee for EOBI Pension

In most cases, registered organisations will register their employees on their own once your term of employment begins. The EOBI website gives detailed instructions for Employers so they can register both new and old employees into the system. Old employees are those who already have a record and a registration with EOBI through past employments, while new employees are generally fresh graduates with no work history or EOBI records.

What to Do If Your Employer Does Not Register You for the Pension Fund?

EOBI urges employees to keep a check on whether their EOBI contributions are being deducted from their income once they are confirmed in their new employment. If the employer is not submitting their contribution to EOBI, the employees can fill a form and submit their own contributions as well. They can also register themselves into the EOBI database upon gaining employment with a registered firm.

How Are Contributions Made to EOBI?

All registered employers and employees must contribute to the EOBI scheme on a monthly basis. The contribution rate for EOBI is as follows:

• Employers must make a contribution that is equal to 5% of the minimum wages
• Employees must make a contribution that is equal to 1% of the minimum wages

All contributions are collected by or deposited in authorised branches of Bank Alfalah and the National Bank of Pakistan. Minimum wages in Pakistan for unskilled labour as of March 2020 are PKR 17,000. However, the EOBI is being charged as per its previous amendment, where the minimum limit was PKR 13,000.

This means that PKR 130 is charged from all employees every month, while employers pay PKR 650 per month, for a total of PKR 780 that gets collected in the pension fund.

How Can EOBI Benefit You?

The EOBI scheme is a pension fund that allows all insured/registered individuals to avail benefits upon retirement. Here are the four major types of EOBI benefits:

1. Old-Age Pension

This is mainly offered to all insured individuals after retirement if they have completed at least 15 years of insured service. The retirement age for men is 60, and for women, it is 55. Those in the mining profession must serve the mining industry for at least 10 years before retirement to apply for this pension. The old-age pension is payable for a maximum of 6 months before the claim.

2. Survivor’s Pension

If an insured person passes away, a survivor’s pension can be provided to their nominees. Aged parents and young widows are also considered eligible for this type of pension. As per the EOBI rules, parents of an unmarried insured employee get a pension for the next 5 years after the individual’s death. For married employees, their widows get lifelong support from the survivor’s pension if the insured person served 3 years of insured service. Children of the deceased can also claim this pension if the surviving parent chooses to remarry, and their stepfather is not willing to take financial responsibility for them.

3. Invalidity Pension

If an insured person becomes permanently disabled, they are provided with invalidity pension to compensate for their lack of regular income. You are only eligible for this pension if your earnings drop to two-thirds of what you were getting before the disability. Moreover, you must have at least 15 years of insurable employment overall or at least 5 years of insured service overall with 3 of these immediately preceding the injury to be eligible for the claim.

This type of pension is renewed every 6 months based on medical reports, and if it continues for more than 5 years, it is converted into a lifelong invalidity pension. This pension is also applicable to just the last 6 months before you make a claim.

4. Old-Age Grant

Old-age grants are generally granted to people who reach the age of retirement but do not meet the minimum criteria to be able to claim for their pension. This grant is paid once and in full, based on a month’s average wage, multiplied by the number of years spent in insurable employment.

Rates of EOBI

The rate of EOBI pension is calculated for old age and invalidity pension using the following formula:

Pension = [Average Monthly Wages] x [Number of Years Spent in Insurable Service] / 50

It is important to note that the minimum pension in September 2018 was PKR 6,500, while the maximum amount can vary as per the calculation based on the above formula. The minimum amount will be raised to PKR 8,500 from the year 2021. The organisation has also leased EOBI property to private owners so that additional revenue can be collected for the pension fund, after which it plans to increase the minimum pension rate to PKR 15,000.

How to Claim Your EOBI?

EOBI recently digitalised all of its records and database, making it easier than ever to not only claim but also check your collected pension fund online. The organisation also released a press release some time back that all those individuals who have reached their age of retirement (60 for men and 55 for women), should contact EOBI with their claims.

Here’s how to claim your pension with ease:

• Visit the EOBI website at www.eobi.gov.pk
• Click “Individual Information” and check your EOBI Registration number using your CNIC.
• All prospective pensioners are now mentioned in the online database.
• Once you find your details online, you can submit the required documents to make your claim.
• The document can be sent to the nearest local EOBI office.
• You can also post your documents at:

Office of Director General (Operations), 3^rd Floor, EOBI House (Ex Awami Markaz), Main Shahrah-e-Faisal, Karachi.

• After EOBI verifies your documents, you will receive a Pension Claim form.
• You will be required to fill out the form and submit it to your Regional Office.
• EOBI will start the claim process to grant the pension after receiving the form.
• Pension will then be granted as soon as possible.
• After the pension is granted, a Pension Book/Card will be issued within 30 days.

Once you claim your benefits, they will be paid via designed bank branches, Easy Paisa, or NADRA outlets.

Documents Required for Pension Claim

You’ll need to send a list of documents to the address mentioned above to file an EOBI claim. However, the documents differ slightly, based on whether you are claiming pension for yourself or are a surviving relative of an insured deceased individual. We’re listing down documents for both:

Now you know exactly how to claim your pension via EOBI if you are nearing retirement. Stay tuned to Zameen Blog for more informative posts. We can be reached on blog@zameen.com for all your queries.