“If the pension budget is not managed effectively, it will surpass the defense budget in roughly seven to eight years,” stated Miftah Ismail, the former Pakistani finance minister. Over the past three years, it has grown rapidly, surpassing Rs1 trillion in FY25.
“A man receives a pension upon his retirement. His widow receives a pension upon his passing. He clarified that his daughter receives the pension following the death of his wife. Due to the flaws in the system, there are also instances of double- and triple-dipping, where the same individual receives multiple pensions. He said that many of the necessary improvements are low-hanging fruit in terms of openness and process simplification.
To put it in perspective, the pension budget is more than six times the combined amount allotted to housing (Rs28bn), health (Rs28bn), education (Rs167bn), and environmental protection (Rs7.2bn). In FY25, military pensions account for more than 65% of the budget.
In order to reduce the pension budget, the government has recently implemented a number of drastic measures, such as eliminating multiple pensions for individuals, lowering the basis for future increases, and recalculating pension calculations from the last drawn salary to an average of receipts over the preceding two years of service.
Due to a lack of political will on the part of those in authority, this issue has also been neglected for years, much like many others that are only handled when they become time bombs. The goal of these measures is to slow down the rate of increase in the pension budget, not to cut it.
