Pakistan seeks $500 million ADB loan for public sector pension reforms

Pakistan has proposed a $500 million loan programme with the Asian Development Bank to support reforms in the public sector pension system and address rising pension liabilities.

According to project details, the initiative titled “Transforming Public Sector Pension Program” is intended to improve the financial sustainability and transparency of government pension arrangements.

The programme is currently listed under proposed status and will be financed through the Asian Development Bank’s ordinary capital resources.

Officials said the reforms aim to reduce the fiscal pressure created by a rapidly growing pension bill faced by both federal and provincial governments.

Under the plan, the government intends to move towards a more sustainable pension framework while strengthening governance and oversight mechanisms.

The programme focuses on three main reform areas. The first is the establishment of a policy and institutional framework to manage pension obligations more effectively.

The second component involves strengthening the operational structure and oversight of the Defined Contribution pension scheme to improve monitoring and implementation.

The third element will introduce a training and awareness framework to help government institutions implement and manage the Defined Contribution system.

Officials said the shift towards a defined contribution-based model is expected to lower long-term pension liabilities and improve transparency in pension management.