ISLAMABAD, July 12, 2024 – In a significant move aimed at managing fiscal responsibilities, the federal government of Pakistan has launched an initiative to evaluate and assess liabilities pertaining to its retirement benefit schemes.
According to sources within the Ministry of Finance, the government is in the process of engaging actuarial services to conduct a comprehensive assessment of these liabilities as of June 30, 2020.
The Ministry highlighted that the federal government currently sustains a workforce of approximately 1.36 million individuals across various sectors, delineated between civil government employees and military personnel. Moreover, there are approximately 1.8 million federal pensioners, with an annual pension bill amounting to approximately Rs500 billion.
The pension system for federal employees predominantly operates under defined benefit schemes, regulated by a framework of laws including the Civil Servant Act of 1973 and the Civil Service Regulations (CSR), alongside other relevant statutory instruments.
Recently, the Ministry of Finance established a specialized Pay and Pension Commission tasked with conducting a comprehensive review of the existing benefit, compensation and pension systems across federal and provincial governments. The commission’s mandate includes identifying and addressing any structural inefficiencies or distortions, while aligning these benefit systems with international best practices.
“In order to effectively fulfill its mandate, the commission requires actuarial expertise to assess the sustainability of the current pension framework and explore possibilities for introducing alternative pension systems,” a spokesperson for the Ministry stated.
Actuarial services play a crucial role in determining the financial health and sustainability of pension benefit schemes by analyzing various factors such as demographic trends, economic forecasts, and fiscal projections. This evaluation will provide valuable insights into the financial obligations of the government towards its retired employees and help in formulating policies that ensure long-term fiscal stability.
The decision to undertake this evaluation underscores the government’s commitment to prudent fiscal management and transparency in financial reporting. By conducting a rigorous assessment of retirement benefit liabilities, the government aims to enhance accountability and ensure that pension obligations are met in a sustainable manner.
Experts anticipate that the findings of the actuarial assessment will guide policymakers in making informed decisions regarding pension benefit reforms, potentially leading to the introduction of more flexible and resilient pension systems that align with evolving economic realities and demographic dynamics.
As the evaluation process commences, stakeholders including retired government employees, financial analysts, and policymakers await the outcomes, which are expected to provide a clearer roadmap for the future of federal pension benefit systems in Pakistan.