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Fiscally Sustainable Pensions in Pakistan
Mahmood Khalid, Naseem Faraz and Aisha Irum
Published:July- Dec 2023
Public sector employment remains attractive for important reasons such as job
security and a guaranteed pension. Evaluating alternate pension systems has gained
importance among policymakers concerned about the aging population and rising poverty
levels. Pakistan has a Pay-As-You-Go type pension system, financed by taxpayers’ money,
and has resulted in the building up of unfunded liability for the government. The
expenditures on superannuation are gradually coming into mainstream discussions on fiscal
sustainability and public finance management. These additional expenditure liabilities
require an increase in future taxes to be solvent. We use scenario-based projections to
highlight how the existing pension system is fiscally unsustainable and what approaches are
needed to make it sustainable.
KEYWORDS:
Fiscal policy, public economics, public finance, tax-induced, pensions..
JEL: H3, E620.
