Daily Times

Government rapidly increasing pension bill as a far more serious problem than the huge power-sector debt. This might sound a bit exaggerated at a time when the government continues to make its pension payments but appears unable to liquidate the circular debt, said Pakistan Businesses Forum (PBF) Vice President Ahmad Jawad, adding that the time is not far off when the ballooning pension expenditure will become our biggest budgetary challenge.

Jawad said the consolidated federal and provincial governments’ pension bills have grown over six-fold, from Rs164 billion in FY2011 to almost Rs1 trillion in FY2021, even before accounting for state-owned enterprises’ (SOEs) retirement liabilities. In the same period, consolidated revenues have increased less than three times. Consequently, retirement payments as a percentage of the consolidated revenues have grown from 7 percent in FY2011 to around 17 percent presently”

The state must look to reduce its obligations by shifting from defined benefit to defined contribution pension plans. The strategy may consider rationalizing existing pension benefits. He stated a proposal that government may call off the current pension system including in state owned enterprises especially in the tear from BPS-19 to BPS-22 or equivalent; except to accommodate the officers of BPS-16 to BPS-18 only. However, for clerical cadres pensions must also continue.