ISLAMABAD (January 20 2003) : National Savings Scheme has introduced a new Pensioner Benefit Account, offering 11.04 percent rate of return, 2 percent higher than the comparable Regular Income Certificate (RIC).
Its rate of return would be pegged with the rate of Pakistan Investment Bonds. However, the account holder would continue getting same rate for ten years at the rate he starts his account.
Like RIC, the Pensioner Benefit Account (PBA) would give monthly returns.
On Rs one million, (the highest limit of a PBA), gross return would be Rs 9200, after deducting 10 percent (Rs 920) withholding tax, which leaves Rs 8280 as balance.
Profits from deposits below Rs 150,000 are exempted from withholding tax. On Rs 15,00,000 the return would be Rs 1380 per month. Minimum amount of deposit would be Rs 10,000.
The scheme would commence on Monday, January 20. However, advertisements would take a few days to appear in newspapers, said Ahmed Awais Pirzada at a press briefing here today to announce the scheme.
The difference of 2 percent between RCI and PBA compensates the cut announced in NSS rates of return on various schemes on January 1, 2003.
Any depositor who withdraws some money from his fixed deposit would pay a service charge on his total investment, which would range from 3 percent of principal in the first year withdrawal, 2 percent for second year and one percent if withdrawal is in third year.
However, PBA offers 2 percent service charges cut on principal on first year of withdrawal, 1.5 percent for second year, 1 percent for third and 0.5 percent for fourth year giving visible relief to the depositors.
After four years, if one withdraws any amount then no service charges are deducted.
A partial withdrawal would have commensurate service charge. The total period is ten years on the basis of what the rate has been fixed.
In its composition the account is termed as of four years of account, offering return equal to those of ten years, explained Pirzada.
The amount to be deposited would be in multiples of thousands and not less.
The account would be maintained at National Saving Centres only and not at centres of other institutions for easy maintenance of accounts.
Keeping account and giving receipts to get monthly return is easier than holding certificates of NSS, which can also be lost.
From PBA, only by giving the withdrawal slip and passbook one can get the amount.
Pensioners eligible would be from federal, provincial, autonomous and semi-autonomous government bodies, and armed forces. No pensioner form private sector would be eligible.
People retired through Golden Handshake Scheme have not been given the status of 'pensioners' and would not be allowed to invest in PBA. Source of an eligible pensioner is also not considered.
Pirzada said that another key feature of this scheme is that Defence Saving Certificates offer 6 percent rate initially then gradually improves to 10 percent.
However, PBA gives the same return, 11.04 percent even for initial months.
If one account holder comes well after passing the maturity date of the account and asks to reinvest the amount then his investment would be considered from the time of maturity. The account is exempt from Zakat treatment.
Pirzada said that by reducing rate of return the benefit the government has derived was Rs 10 billion during 2000-01 and Rs 20 billion during 2001-02.
The new schemes launched in UAE attracted good response from overseas Pakistanis and Rs 2 billion has been deposited in those accounts till now. Two schemes were launched in UBL and HBL.
While the provision of nomination to wife and minor children is also allowed, earlier, minors were not permissible for nomination.
He said that there is a world-wide cut in interest rate and the government has also reduced its mark-up on Pakistan Investment Bonds, which led it to reduce the rates of NSS.
He said that these NSS rates are still better than market available rates of banks.