The Asian Development Bank (ADB) has raised concerns over Pakistan’s pension scheme for government employees. In a recent report, ADB said the scheme is attractive but lacks a proper funding mechanism. The bank warned that the growing pension burden puts serious pressure on the national treasury. Reforms are urgently needed to ensure long-term sustainability.
The report also called for major improvements in Pakistan’s insurance sector. ADB noted that insurance plays a key role in protecting people financially during natural disasters. However, in Pakistan, insurance coverage remains limited. Especially in the private sector, risk financing through insurance is almost absent. This gap weakens financial security for individuals and businesses.
ADB urged the government to actively promote the insurance industry. It recommended raising public awareness, especially among low-income groups. The report suggested expanding social insurance and improving regulations. It also said group insurance schemes could help reach more people than individual plans. A better regulatory environment would attract investment and boost sector growth.
According to the report, most Pakistanis have little or no awareness of insurance benefits. The current market penetration is extremely low. ADB advised increasing insurance premiums to strengthen services. The government, it added, should also ensure mandatory coverage in key areas of the private sector. This step could build resilience and reduce financial risks.
ADB emphasized that Pakistan needs to expand the reach of the Employees’ Old-Age Benefits Institution (EOBI). The report stressed that without a funding structure for public pensions, the system is unsustainable. Comprehensive pension and insurance reforms are vital for easing pressure on the budget and improving economic stability.