Business Desk 
Aug 02, 2025
The Asian Development Bank (ADB) has cautioned that while Pakistan’s pension plan for government employees is deemed "attractive," it creates a very substantial burden on public finances without a proper funding mechanism in place.
In a report released on Friday, the Manila-based lender pointed out that Pakistan's large post-retirement benefits provided to service professionals are to be supported by nothing but a plan that does not have structure, referring to this as a “material drain on the national exchequer.”
“The burden of the exchequer on government pensions is very high,” said ADB, and goes on to say that the government must reconsider and redesign the way it finances pensions and that the Employees' Old-Age Benefits Institution (EOBI) must expand and allow for a more sustainable and contributory pension system, where money builds over some time and is not only positive or reliant on annual government spending.
The report also identified urgent reforms needed for the insurance sector in Pakistan to develop, suggesting that insurance is a necessary and vital pillar for financial protection for economic growth.
Moreover, the ADB believes a stronger insurance market can also assist the nation in managing risk associated with natural disasters and better resilience for businesses and vulnerable communities.
“Pakistan needs to promote the insurance sector, especially social insurance programs for the poor,” the report noted, stressing that affordable and accessible coverage could reduce the government’s financial burden during crises.
The findings come at a time when Pakistan is working to broaden its tax base and cut unsustainable expenses under pressure from international lenders.
