PRESENTATION ON CONTRIBUTORY PROVIDENT FUND

1. Contributory Provident Fund

According to Workers Welfare Fund Employees Rules, 1997, Contributory

Provident Fund is a collective balance comprising contribution by employee @ 8.33% of
emoluments of the employee and an equal amount contributed by the employer i.e PWWF.

2. Maintenance Of Contribution Provident Fund By PWWF:

The sums collected from the employee and employer are deposited in a Bank of
Punjab being maintained separately whereupon the CP Fund Balance earns profit as
offered by the bank each year. The same interest rate is applied while calculating the
uptodate balance of the employee at the time of CP Fund Advance or at the time of Final
Payment on the retirement of the staff.

3. Point of Conflict:

The petitioners requested that they are entitled for interest on CP Fund as laid down
in Section 182 of Workers Welfare Service Rules, 1997 which describes:

“Fund shall pay to the credit of the account of each subscriber, interest
at such rate, as may be announced for each year by the Government in
respect of subscriptions to the General Provident Fund under the
General Provident Fund (Central Services) Rules plus additional benefit
at thirty percent over and above the normal rate of interest”.

Whereas at the time of making final payment to the petitioners, lesser interest rates
given by Bank of Punjab (i.e the bank where CP Fund deposits are parked) were applied to
arrive at the closing balance of CP Fund in contravention to the rule ibid. Although, as per
directives of Honorable Lahore High Court, interest rates announced by the Government
plus 30% additional benefit have been applied to set aside the case. It is noteworthy to
mention here that 30% additional benefit has been granted to the petitioners till it was
abolished by the Government vide Finance Division letter No. ……..dated………on GP
Fund as well as CP Fund but the petitioners are claiming 30% additional benefit even after
its discontinuation. It is worth mentioned here that thirty percent bonus was being granted
by the then Government when the Worker Welfare Fund Employees Rules 1997 were
framed while discontinuation of the bonus in 2001 has never been challenged being the GP
Fund Rules adopted by the Board.

4. Components Of CP Fund Balance:

i. Contribution from salary of the employee (i.e 8.33% of emoluments).

ii. Contribution by PWWB an amount equal to the contribution made by
employee.
iii. Interest/Profit on contributions/subscriptions balance in accordance with the
rate announced by the Govt. as declared on GP Fund.
 iv. Additional benefit/Bonus over and above the normal Interest Rate as
mentioned in component (iii).

5. Comparison of CP Fund and GP Fund:

Sr.# CP Fund GP Fund Difference

1. Contribution from salary of the Contribution from salary of the
employee (i.e 8.33% of employee (i.e 8.33% of No
emoluments) emoluments)
2. Amount equal to subscriptions Amount equal to subscriptions
deducted from salary of deducted from salary of Yes
employee is contributed by employee is not contributed by
PWWF. Govt.
3. Interest/Profit on Interest/Profit on
contributions/subscriptions contributions/subscriptions
balance in accordance with the balance in accordance with the No
rate announced by the Govt. as rate announced by the Govt. as
declared on GP Fund. declared on GP Fund.
4. Petitioners are demanding Additional Benefit/Bonus over
additional benefit/Bonus over and and above Interest Rate was
above the normal Interest Rate discontinued in 2001 vide letter Yes
as mentioned in component (iii) No. dated

6. Financial Impact of 30% Additional Benefit/Bonus on Interest:

To illustrate the financial impact of 30% Additional Benefit/Bonus on interest,

following comparison has been tabulated for an employee of BPS-16 having qualified
normal service of 25 years.

 Monthly Subscription as Rs. 4,960

 Interest Rate (Assumed) as 10% each year
 Additional benefit/bonus on interest as 30%

Sr.# Period GP Fund with CP Fund with GOP CP Fund with GOP
GOP Interest Interest Rate Interest Rate plush
Rate Addl. Benefit @
30%
1. After 5 Years Rs. 383,058 Rs. 766,117 Rs. 825,732
Say Rs. 385,000 Say Rs. 765,000 Say Rs. 825,000
2. After 10 Years Rs. 999,978 Rs. 1,999,956 Rs. 2,347,089
Say Rs. 1,000,000 Say Rs. 2,000,000 Say Rs. 2,350,000
3. After 15 Years Rs. 1,993,533 Rs. 3,987,065 Rs. 5,150,090
Say Rs. 1,995,000 Say Rs. 3,990,000 Say Rs. 5,150,000
After 20 Years Rs. 3,593,663 Rs. 7,187,325 Rs. 10,314,439
Say Rs. 3,595,000 Say Rs. 7,190,000 Say Rs. 10,000,000
5. After 25 Years Rs. 6,170,688 Rs. 12,341,376 Rs. 19,829,417
Say Rs. 6,170,000 Say Rs. 12,500,000 Say Rs. 20,000,000
 There are approximately 2,500 employees comprising Board Employees, Teaching
and Non-Teaching Staff. For example, there are 1,000 employees in BPS-16, the impact
on additional benefit is worked out as under:

Amount of Bonus = 1,000 x 7,500,000 = Rs. 7,500,000,000

(Rupees Seven Billion Five Hundred Million)

The financial impact of additional benefit for BPS-17, BPS-18, BPS-19, BPS-20 will
be more than Rs. 7,500,000 for normal service of 25 years and will be less than Rs.
7,500,000 for the employees working below BPS-16.

An overview in this regard is given as following where the monthly subscription for:

BPS-05 Rs. 1,330 Per Month

BPS-16 Rs. 4,960 Per Month
BPS-19 Rs. 10,660 Per Month

Analysis for an estimated qualified service of 25 Years and Interest Rate assumed @ 10%:

Sr.# Basic Pay GP Fund with GOP CP Fund with GOP CP Fund with GOP
Scale Interest Rate Interest Rate Interest Rate plush
Addl. Benefit @ 30%
1. BPS-05 Rs. 1,654,240 Rs. 3,309,280 Rs. 5,317,162
Say Rs. 1,655,000 Say Rs. 3,300,000 Say Rs. 5,500,000
2. BPS-16 Rs. 6,170,688 Rs. 12,341,376 Rs. 19,829,417
Say Rs. 6,170,000 Say Rs. 12,500,000 Say Rs. 20,000,000
3. BPS-19 Rs. 13,035,624 Rs. 26,524,005 Rs. 42,617,256
Say Rs. 10,700,000 Say Rs. 26,500,000 Say Rs. 42,500,000

From the above analysis it is evident that petitioners are demanding additional
bonus on interest after completion of 25 years’ service as:

For BPS-05 Rs. 2,200,000

For BPS-16 Rs. 7,500,000
For BPS-19 Rs. 16,000,000

Besides this it is pertinent to mention here that the employees are being benefitted
with the salary package including:

 House Rent Allowance equal to House Rent Requisition specified for Islamabad
 Conveyance Allowance specified for Islamabad
 Scholarship/Free Studies for the Employees of PWWF
 Gratuity at the rate of 2 Running Basic Pays for qualifying number of service years
 However, final payments as per directives of Honorable Lahore High Court, Lahore
have been worked out by the Directorate of Finance, PWWF in the light of Para 182 of
Workers Welfare Fund Employees Rules, 1997 i.e GoP Interest Rates announced by GoP
in replacement of Bank of Punjab interest rates but the PETITIONERS are demanding
Final Payments after the Additional Benefit of 30% over and above the normal interest rate
offered by the GoP is added although discontinued after 2001 by the Finance Division,
Govt. of Pakistan.