Pakistan needs pension reforms

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The provision of state pensions is often tainted with bombastic rhetoric and broken promises. In lieu of catering to the needs of retiring workers, most developing economies have yet to devise an adequate mechanism that stabilises pension expenditure in a sustainable manner. Since a recent report by the World Bank has predicted a significant increase in the world’s elderly (nearly 1.3 billion people) in low-income countries by 2050, it is unfathomable that governments in such countries are still dragging their feet on legislation for pension.
The continuous improvements in mortality and life expectancy have set forth a demographic transition in Pakistan. This steady increase in the elderly population is expected to result in more than 43 million people above the age of 60 by 2025. However, the dismal performance of the authorities in chalking out comprehensive social protection reforms validates that they are in no mood to prepare for such impending changes. Large-scale urbanisation has adversely impacted the traditional family models where elderly members were catered by their young relatives. Various studies have repeatedly identified the high incidence of chronic illnesses such as diabetes mellitus (28.1 percent), hypertension (42.5 percent), and arthritis (26.6 percent) in older people across the country. These ailments require a high-quality medical care, which is either not available in the case of government hospitals or come at a hefty price in private hospitals. The state should be held responsible for assuring free medical care along with other adequate arrangements to at least its retired citizens.
State pensions are largely restricted to those employed in the formal sector. To embrace all those in need of governmental assistance, legislations should first focus on comprehensively documenting the informal sector of the economy so that their future needs can be ascertained. Pakistan should also invest in its pension systems to make sure that its welfare schemes do not weigh down its economy. Although bills like the Employees’ Old-Age Benefits Institution (EOBI) Act 1976 have long been in place to provide social insurance benefits to employees, they still await effective implementation because of missing funds. Since the present legislation calls for as much as five percent contribution from employers and one percent pension from employees, a large number of workforce prefers to make do without EOBI benefits.