Way forward on Baldia arrangement funds

The ILO secures the payment of the pensions of the victims of the Ali Fire for the duration of the contingencies, with indexation

Press release | Islamabad, Pakistan | 08 February 2023
ISLAMABAD (ILO News) - In September 2016, the ILO was designated the fiduciary of the funds provided voluntarily by KiKTextilien und Non-food GmbH (KiK) to fund the gap to top up the statutory benefits due from the Sindh Province Employees’ Social Security Institution to meet the requirements of Convention 121 . An agreement in excess of US$5 million was reached to provide compensation for loss of income, medical and allied care, to the victims of the tragic fire at the Ali Enterprises garment factory in Baldia, Karachi, one of the worst industrial accidents in Pakistan.

After a thorough examination of all reasonable scenarios with concerned stakeholders, guided by the victims’ interests and the funds’ sustainability , the ILO is pleased to announce that it was able to transfer the funds from its headquarters in Geneva to Pakistan and designated an insurance company as its agent to invest the funds in government issued Pakistan Investment Bonds which are guaranteed by the Government of Pakistan. In addition, the agent will ensure payment of the benefits to the victims for the whole duration of the contingencies. Importantly, the ILO continues to be the fiduciary of the funds.

In addition, this arrangement has made possible a 75% increase in total monthly benefits to for the categories of victims for whom the issue of indexation was left pending in the initial 2016 agreement. The purpose of the indexation is to adjust the monthly benefits to reflect the increase in the cost of living in Pakistan from 1 January 2017 to 1 January 2023. For these victims, this 75% increase will be applied to the total monthly benefits that they receive under the 2016 Agreement and the Sindh Employees’ Social Security Act (SESSA). The ILO is also committed to paying such beneficiaries the retroactive indexation due from 1 January 2017 to 1 January 2023 in the first semester of 2023.

All beneficiaries were invited to a meeting organized by the ILO at the end of December 2022, in which the victims were informed of the increase in their benefits and guaranteed annual indexation in the future. In addition, a detailed individualized letter, written in Urdu, was given to the beneficiaries on this occasion. The ILO has also shared with beneficiaries the details of the dedicated helpline and physical front desk available during weekly working hours.

As fiduciary, the ILO is responsible for facilitating the process for the funds’ implementation, administration and governance. Every year, the ILO will transmit to the beneficiaries a yearly benefit statement explaining each beneficiary's entitlement. The ILO will continue to collaborate with the Government of Sindh and SESSI, which will continue to administer the basic pension that the victims of this tragic fire are currently receiving under SESS Act.