Pakistan’s Finance Minister, Muhammad Aurangzeb, announced plans to reform the public sector pension system on Wednesday. Starting next fiscal year, new government employees will no longer receive state-funded pensions. Instead, they’ll contribute a portion of their salary to a personal pension fund.
This shift aims to reduce government expenses, as current pension costs range between Rs800 billion and Rs1 trillion annually—around 1% of Pakistan’s GDP.
At “The Future Summit – What Matters Now,” Aurangzeb predicted a 12% rise in remittances, estimating that overseas Pakistanis will send $34 billion in FY 2024-25, compared to $30.25 billion last year. He encouraged the private sector to drive economic growth, moving away from government-led development.
Aurangzeb also addressed the challenge of covering pensions for retirees and employees hired before July 2025, describing it as a “stock issue.” Despite these hurdles, he expressed optimism about potential credit rating upgrades from agencies like Moody’s, Fitch, and S&P this year.