According to the latest estimates, expenditure on account of government employee pensions for FY-2025 are going to be Rs 1014 billion or almost 6 percent of the budget outlay for FY 2026. It shows an increase of Rs193 billion or almost 20 percent over the previous year.

As compared to FY-2022 pension expenditures have almost doubled in four years, averaging around 25 percent per annum. Spiraling trend of pension expenditures at this abnormally high rate presents a very worrying state of affairs of our already resource strained economy.

In line with prevailing trends, expenditures on account of pensions are estimated to reach 56 percent of the current expenditures by 2050. As an unfunded liability of the government it presents itself as a ticking time bomb that warrants emergency disposal.

As proposed already, levy of 2.5-5% tax on pensions is estimated to yield Rs 20-40 billion additional revenue. But it would be of little help especially when the cost associated with its administration is also taken into account. Therefore, conventional wisdom........

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