Pakistan’s growing pension schemes are a threat to its development priorities- World Bank report

Pakistan’s growing pension schemes are a threat to its development priorities- World Bank report


The World Bank warned the government of Pakistan to look into their pension schemes. These schemes have a growing fiscal cost which could jeopardize other development priorities of the country. 

Sources have affirmed that the shared report said that:

“If the pensions along with salaries will keep growing, there are definite chances that it will put a strain on other public expenditures.”

However, the report suggests the government takes immediate actions like limiting the index of benefits and shorten the benefits for early retirees.

The World Bank report has prepared at the federal level at the request of the Ministry of Finance, Punjab, and Sindh.

It used actuarial projections to estimate the financial costs and benefits of civil service retirement schemes. Further, the impact of reforms, which will modify parameters or qualifying terms and schemes for new errant.

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“Fiscal costs of the Punjab and Sindh Civil Service Pension schemes are projected to almost double as a proportion of fiscal revenues by 2060. If pensions increase in line with wages yet could be stabilized at about 15 percent of fiscal revenues if benefit increases were limited to the growth in consumer prices. Limiting benefit adjustments could, therefore, stabilize the finances of civil service pensions,” the report stated.

Certainly, the basic salaries and pensions are expected to increase in Punjab. From 25% of provincial revenue in 2020 to more than 50% in 2060. In Sindh, the revenue will increase from about 32% in 2020 to 42% in 2060. 

However there are quite chances that pension will overtake wages in 2023 in Punjab, and in 2028 in Sindh.

Key Problems

Thus, the report indicated three fundamental problems for the growth in expenditure are:

  • Substantial increases in real terms in civil servant wages.
  • Pension benefits, and allowances, a retroactive Supreme Court decision restoring commuted benefits.
  • Growth in the civil service headcount.


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