The court rules that marginal deficits can be corrected through the legal “rounding” mechanism provided for in the law
ISLAMABAD:
The Federal Constitutional Court (FCC) has upheld a series of judgments of the Lahore High Court (LHC) directing the Employees Old Age Benefit Institution (EOBI) to grant monthly old age pension to workers who have completed more than 14 and a half years of insurable employment.
The court has ruled that marginal deficits can be remedied through the legal “rounding” mechanism provided for in the law.
A three-member bench headed by Justice Amin-ud-Din Khan, and comprising Justice Syed Hasan Azhar Rizvi and Justice Syed Arshad Hussain Shah, dismissed five civil petitions filed by the EOBI against the LHC rulings. The detailed order was written by Justice Rizvi.
EOBI challenged the LHC rulings of August 29, 2024 and March 5, 2025, according to which the high court had admitted the petitions of five policyholders and ordered EOBI to pay them old-age pension.
It had argued that the workers were ineligible because they had not completed the mandatory 15 years of insurable employment required under Section 22(1)(b) of the EOBI Act 1976.
According to the facts recorded by the court, the respondents (Muhammad Rafique, Muhammad Yaqoob, Shahbaz Hussain, Imran Butt and Rasheed Anwar) had completed between 14 years and six months and 14 years and 11 months of insurable employment before they retired.
Their pension applications were rejected by the EOBI and, in some cases, by adjudicating and appellate authorities under the law.
However, the LHC granted relief based on the condition contained in the schedule to the law, which states that a period of six months or more of insurable employment will be treated as a full year.
Before the FCC, EOBI argued that the program applied only at the pension calculation stage and could not override the substantive eligibility requirement of 15 full years.
Furthermore, it relied on an internal circular issued in February 2022 which clarified that employment of 14.5 years or more could not be rounded to determine eligibility and that such persons were only entitled to a lump-sum old-age benefit under Section 22A.
Rejecting the arguments, the court held that the law created two distinct benefit schemes – a monthly pension under Section 22 and a block grant under Section 22A – but that the program was an integral part of the statutory scheme and could not be divorced from the question of eligibility.
The court observed that a rigid and literal interpretation of Section 22(1)(b) would lead to “unjust, harsh and disproportionate consequences” by denying pension to workers who had substantially complied with the law but had failed to comply by a negligible margin.
The FCC noted that the legislature had consciously incorporated the rounding rule to avoid technical disqualifications and difficulties in social welfare legislation.
