Islamabad ‘:
The Asian Development Bank (ADB) has said that the Pakistani government -employed pension scheme is “attractive” but it puts a huge burden on the national tax because it lacks a financing mechanism.
In a report published on Friday, the Manila-based institution also called for sweeping reforms in the country’s underdeveloped insurance sector to strengthen economic protection against natural disasters and support growth in the private sector.
ADB detailed how the generous benefits offered to retired government employees are not supported by a structured financing plan, making the system a significant drainage of public finances.
The report noted that “the burden at the government’s pension on the tax is very high”.
The report called to expand the scope of the employees’ age system institution to create a more sustainable, contributing system and emphasized the critical role that a robust insurance sector could play in Pakistan’s financial stability.
The report suggested that the government should promote the insurance sector, especially for social insurance programs targeting the poor.
It also emphasized the need to improve the legislative environment for insurance companies.
