Pension system reforms: Pakistan floats programme to secure USD500m ADB loan

ISLAMABAD: Pakistan has proposed a programme to secure a USD 500 million loan from the Asian Development Bank (ADB) to support reforms aimed at making the country’s public sector pension system more financially sustainable and transparent.

According to project details, the proposed Transforming Public Sector Pension Program aims to address the growing fiscal burden from rising pension liabilities through structural reforms and institutional strengthening.

The program is currently under proposed status and will be financed through ordinary capital resources of the ADB.

Under the initiative, the government plans to transition towards a more sustainable pension model, including strengthening governance and oversight mechanisms.

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The program includes three key reform areas. First, it aims to institutionalize a framework for a sustainable pension system to improve long-term fiscal management of pension obligations.

Second, it seeks to enhance the operational framework and oversight mechanisms for the Defined Contribution (DC) pension scheme, ensuring better monitoring and implementation.

Third, the program will establish a sustainable training and awareness framework to support government institutions in implementing and managing the DC pension scheme.

Officials said the proposed reforms are part of broader efforts to contain the rapidly increasing pension bill, which has become a major fiscal challenge for the federal and provincial governments.

The shift towards a defined contribution-based pension model is expected to reduce long-term liabilities while improving transparency and efficiency in pension management.

Copyright Business Recorder, 2026