The federal government is gearing up for crucial negotiations with the International Monetary Fund (IMF) later this month, with the Fund pushing for comprehensive pension reforms to help ease fiscal deficit, well-informed sources told ProPakistani.
According to sources, the lender is actively advocating for immediate action on the front of pension reforms. Their recommendation is to trim down pension funds through a series of reforms.
One of the central points of concern is the exponential increase in the pension budget, which has surged by an astounding 500 percent over the past 12 years. To address this, the IMF is calling for a fundamental shift that would segregate pensions from the national budget, sources revealed.
The IMF wants Pakistan to remove pensions from the overarching national budget and their relocation to a dedicated pension fund. This strategic unbundling of pensions from the budget is believed to be a significant move that, if adopted, would help in reducing the fiscal deficit, a point strongly recommended by the IMF.
Another proposal set forth by the IMF revolves around discouraging early retirement, a practice the lender argues should be curbed to ensure the long-term sustainability of the pension system. The Fund envisions a streamlined pension structure, where pensioners would be entitled to just one pension, sources added.
In line with this simplification, the IMF is also suggesting that retired officers who have served in various institutions should not receive pensions from multiple sources. A concerted effort to end the practice of awarding up to three pensions to a single retiree is another crucial recommendation put forth by the IMF.