Looming pension crisis cries out for corrective measures

Pension reform is again a hot topic, but this time, bureaucrats will make it appear as if it is intended to benefit top officials. The reforms go beyond just raising the retirement age or taxing pensions. Instead, a series of actions, similar to those that were done in Khyber Pakhtunkhwa (KP), should be seriously considered to reduce the cost of pensions to the government exchequer. The national pension cost will reach nearly Rs2 trillion in FY24, and it is predicted to rise to Rs10tr in the next decade if no reforms are implemented. In 2002-03, the pension cost stood at Rs25 billion, but in a span of just 20 years, it skyrocketed to over Rs1.5tr. Pension reforms have previously been tested in KP and generated the expected cost-saving results. It is high time to rationalise the existing pension programme and transition to more modern schemes available in developing and developed countries.