Pakistan plans 15% increase in pensions for retired workers under EOBI scheme

A 15% increase in monthly pensions for retired workers under the Employees’ Old-Age Benefits Institution (EOBI) is expected to be announced soon by Pakistan Prime Minister Shehbaz Sharif, government officials said on Thursday.

The raise is likely to be effective from May 1, though officials have not publicly confirmed the date. Speculation in the labor market suggests the increase could be backdated to Jan. 1, 2025, with pensioners receiving arrears for the first four months of the year.

Currently, the minimum monthly EOBI pension stands at PKR 10,000, while the maximum is PKR 21,000, based on a formula that considers the employee's earnings and contribution history.

The EOBI covers insured persons (IPs), employees who meet eligibility requirements for pensions including Old-Age, Survivors, Invalidity, and Reduced Pensions, along with parental and minor pensions and a lump-sum Old-Age Grant.

To qualify, male workers must be at least 60 years old and female and workers at least 55, with a minimum of 15 years of insurable employment and contributions.

Pension expert Israr Ayoubi said the first EOBI pension was issued in 1983 at a rate of PKR 75 per month. Since then, the amount has increased 20-fold through a prescribed actuarial evaluation of the fund’s assets and liabilities.

However, the financial sustainability of the EOBI fund remains a concern.

According to the 11th Actuarial Valuation of the EOBI Pension Fund, conducted under International Public Sector Accounting Standards (IPSAS-39), the fund was in deficit by PKR 2.517 trillion as of June 30, 2022. The total accrued liability stood at PKR 2.965 trillion, while the fund’s value was just PKR 448 billion.

Ayoubi warned that the EOBI Fund may begin shrinking within the next five to 10 years and could be entirely depleted in 11 to 16 years if employer contributions remain at the current 6% rate.

Despite this, the EOBI added 500,000 new IPs and more than 50,000 pensioners in the past year. It disbursed PKR 51 billion in pensions during the 2022–23 fiscal year, even though it collected only PKR 40 billion in contributions from registered employers.

A formal announcement from the prime minister is expected in the coming days.