Finance Minister Muhammad Aurangzeb announced on Wednesday that public sector employees hired from the next fiscal year will no longer receive state pensions. Speaking at The Future Summit – What Matters Now, Aurangzeb revealed that under the new reforms, employees will contribute a portion of their salaries to create their own pension funds.
This policy shift aims to reduce the government’s pension expenditure, which currently ranges between Rs800 billion and Rs1 trillion annually—about 1% of the GDP for FY25. The minister highlighted that while current retirees and employees hired before July 1, 2025, will continue receiving pensions, addressing their payouts remains a challenge.
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Aurangzeb projected a 12% increase in remittances, with overseas Pakistanis expected to send $34 billion in FY2024-25, compared to $30.25 billion last year. He also stressed the private sector’s role in driving economic growth, stating that reduced government involvement in certain sectors would be beneficial.
On economic indicators, Aurangzeb mentioned improvements in Pakistan’s credit rating and anticipated upgrades from global rating agencies to a single ‘B’ category during the current fiscal year. He noted that reduced borrowing costs, driven by falling Kibor rates, are easing financial pressures on businesses, signaling a positive trend for private-sector lending.
Addressing Pakistan’s population growth rate of 2.55%, the minister described it as an “exploded bomb” causing widespread challenges, including child stunting and educational deficits. He called for a comprehensive approach to health, education, and family planning, alongside climate resilience efforts.
At the summit, UAE Consul General Dr. Bakheet Ateeq Al Rumaithi surprised attendees by delivering his speech in Urdu, reaffirming Abu Dhabi’s commitment to supporting Pakistan’s economic growth. Dr. Reza Baqir, former SBP governor, attributed Pakistan’s recurring economic crises to persistent fiscal and current account deficits, emphasizing the need for sustainable reforms.
