Islamabad, Dec 2: The federal government is contemplating lowering the retirement age for government employees from 60 to 55 to save approximately Rs. 1 trillion annually on pension expenses, as reported by Dawn. The initiative is expected to reduce long-term pension liabilities by Rs. 50 billion annually.
While the proposal could lower pension payouts by shortening payment periods, it might also incur significant upfront costs due to severance packages and early retirements. Over the past decade, pension costs have skyrocketed from Rs. 164 billion in 2011 to Rs. 988 billion in 2021, while tax revenues have only grown 2.7 times during the same period.
Reforms include a contributory pension scheme for future employees and suggest public sector corporations and regulatory bodies adopt similar retirement age reductions while independently funding severance costs.
This plan mirrors regional practices in countries like India, Malaysia, and Sri Lanka, where retirement ages range from 55 to 60. However, concerns persist regarding the potential loss of experienced staff and its effect on workforce efficiency. If implemented, the government anticipates significant savings on pension costs in the long term.
