Govt has launched a digital pension verification system for pensioners, but why?

The Government of Pakistan has initiated a nationwide digital pension verification system based on biometric and facial recognition technologies. 

The initiative, jointly led by the Prime Minister’s Office, the Controller General of Accounts (CGA), and NADRA, marks a significant milestone in the country’s journey toward digital governance and citizen-centric reforms. The policy was finalized during a high-level meeting held on 10 March 2026 under the supervision of the Prime Minister’s Office. 

During the meeting, key decisions were taken to replace the conventional and often difficult pension verification procedures with a modern, app-based Proof of Life mechanism that would allow pensioners to verify themselves digitally from anywhere in the country.

According to official correspondence issued by the CGA office, major progress has already been achieved on several fronts. 

NADRA and CGA have successfully completed integration of their systems to enable direct transmission of pensioners’ verification data. As a result, the role of commercial banks in manually verifying pensioners is being eliminated, although banks will continue to serve as pension disbursement channels.

The new system will allow the CGA to automatically update pensioners’ records immediately after digital verification, ensuring uninterrupted pension payments and reducing delays caused by paperwork or manual intervention. In addition, a dedicated grievance redressal mechanism is also being established to facilitate pensioners facing technical or verification-related issues. But why was such a detailed system needed?

The need for digital verification

For years, Pakistan’s pension system placed the burden of proof on the weakest person in the chain, i.e, the pensioner. A retired government employee, often elderly, unwell or dependent on family members, had to periodically prove that they were alive so that the state could keep paying what was already owed. 

Under the latest procedure, pensioners were required to provide proof of life through biometric verification at a bank branch. In cases where biometric verification could not be completed because of illness, infirmity, old age or missing fingerprints, a life certificate was needed making the process bureaucratically complex for the elderly. 

While this system made administrative sense on paper, in practice it turned verification into a recurring physical test and left loopholes. The State Bank of Pakistan had already instructed banks to comply with biometric verification requirements for pensioners drawing pensions from AGPR Islamabad, showing how deeply banks have to become embedded in the verification chain. 

This especially becomes a problem for pensioners in small towns, remote districts or fragile health. For them this meant travel, waiting, dependence on branch staff, and the risk that a missed verification could disrupt pension payments.

The system was also needed because fingerprints, the backbone of Pakistan’s older biometric model, are not always reliable for the elderly. NADRA itself moved toward facial recognition after recognising that elderly people and citizens with medical conditions can face difficulties with fingerprint verification. The service was even added to the Pak-Identity mobile application and NADRA centres were directed to issue facial-recognition-based verification certificates where fingerprints fail. 

The system was needed because the old model did not serve the pensioners. It made elderly citizens physically prove their existence again and again, relied on manual channels that created delays, and depended on fingerprints that often failed the very people most likely to need pensions. But more importantly, the system also did not serve the state well-enough.

This brings us to the question why it is necessary to verify the lives of pensioners. And why do the vulnerabilities in biometric and physical verification systems concern the average, non-government-employed taxpayer.

The Pension scam:

The enforcement of these biometric verifications was first needed when Pakistan started to unearth ghost pensioners. 

How is a ghost pensioner formed? If a pensioner dies, the death is not immediately reported to the pension office, bank or accounts department. Because pension money is already moving through a familiar channel, the account keeps receiving monthly payments. In a simple economic sense, the family could be financially better off not declaring the death at all. 

In older systems, bank branches knew the family and the process relied on papers, signatures and attestations, relatives could continue withdrawing money even after the original pensioner had died. Profit’s reporting on Pakistan’s earlier pension system described this exact weakness: family members were able to keep drawing pensions using forged signatures and fake attestations, especially where staff familiarity replaced strict physical verification. 

That vulnerability does not get fully removed even with the biometric verification. As mentioned earlier, fingerprints are not always reliable. More importantly, sometimes the fraud moves beyond family members and becomes an accounts-office racket. A person, no matter how incorruptible, if placed at the helm of verifying physical presence, can always be incentivised to keep a cut and let the fraud run. 

The mechanics are often mundane. Someone may retain access to the pensioner’s ATM card, continue drawing from the account, arrange paperwork, or rely on old relationships at a bank branch. In more organised cases, dormant accounts of deceased pensioners can be revived with the help of insiders. 

A reported Hyderabad pension scam, for instance, involved around 60 inactive pension accounts of deceased municipal employees being reactivated, after which millions of rupees were allegedly withdrawn through unauthorised transactions. 

In the Hyderabad case, FIA-linked reporting said fraudulent transactions were carried out through reactivated dormant pension accounts, while another case involved Rs4.3 million being paid to a fake claimant who impersonated the deceased wife of a pensioner; the pension reportedly continued for two and a half years after her death. The weakness can sit inside the chain connecting accounts offices, banks, pension records and manual verification. A digital verification removes that chain to a certain extent.

This is one of the reasons why proof-of-life rules became central to pension reform. Under earlier requirements, a pensioner’s account could become dormant if the person failed to submit a life certificate, undergo biometric verification in March and October, or draw pension for six consecutive months. This at the very least gives a 6 month cushion for fraud.

The new NADRA-linked system is designed to make that test harder to bypass by connecting banks with NADRA’s digital verification infrastructure and confirming eligibility through Proof of Life Certificate and Family Registration Certificate systems before disbursement. 

In simple terms, the scam survives when the state does not know that the pensioner has died; the new system is meant to make that ignorance much harder to exploit. 

While it is a step in the right direction, this does not solve for the crisis in its entirety.

A Deeper Problem

A further grey area is created by the fact that family pension is itself legal. When a government pensioner dies, eligible survivors such as a spouse, young son, unmarried daughter, widowed daughter or divorced daughter are entitled to receive a portion of the pension under prescribed conditions. 

While fraud enters when the death is hidden, this raises a deeper, often contended with question. Barring the financially challenged, does the state owe high amounts of pension to the family of high level government officials?

Pakistan’s pension calculation was previously being calculated on the last drawn salary, meaning the final pay slip, including late-career promotions and last-stage pay increases, became the anchor for decades of post-retirement payments. That is why the Ministry of Finance’s reform proposal tried to shift the calculation to the average salary of the last 36 months instead of the last drawn pay, with gross pension set at 70% of average pensionable emoluments. 

But the bigger problem is the compounding effect. In 2009, the government included future retirees among the beneficiaries of a pension increment, and then repeated the practice more than six times in later years. This meant that a person retiring after 2020 could carry several past increases into the pension calculation before even becoming a pensioner. After that, new annual increases could be added again. In simple terms, the state was raising the starting pension of future retirees. In Pay and Pension Commission’s proposed fix was to stop this by keeping each future increase as a separate amount, rather than letting each raise become part of a larger base on which the next raise would be calculated. However, this fix does not act retroactively. Meaning that employees retired before 2025 can not be deprived of the high levels of pensions they are making.

This means that the pension for some of the retired high level employees exceeds their last drawn salary in service. Not only did it incentivise early retirement, but referring to the earlier question, the state is mandated to pay this hefty amount to the successors of said employee, if they die. Should the state do it? Is more a question of principle.

Here is some context. Pakistan, a fiscally strained, poor country faces a huge pension crisis. The federal pension allocation has risen by over 500% over 12 years, with Rs761 billion initially allocated for federal pensions in FY24. By FY25, the proposed pension amount had reached Rs1.014 trillion, up 26% from the previous year. 

In the FY26 federal budget, Pakistan’s pension bill was estimated at Rs1.055 trillion. This works out to about 0.81% of GDP. Against the total federal budget outlay of Rs17.573 trillion, pensions made up about 6.0% of the annual federal budget.

As laws around fraud and recalculation have tightened, a sustainable reform would still need to solve for the fundamentals of pension. A problem that is tough to solve due to the policymaker’s vested interest in their own retirement benefits

Current Progress

One of the most critical aspects of the initiative involves the integration of all commercial banks with NADRA’s digital verification infrastructure under the supervision of the State Bank of Pakistan (SBP). The CGA has formally requested the Finance Division to direct SBP to ensure that every commercial bank branch connects with NADRA’s APIs, including the “Nishan Pakistan” platform and the e-Sahulat App.

Under the proposed integration, banks will be required to adopt NADRA’s multi-biometric verification services, enabling fingerprint and facial recognition within banking systems and mobile applications. Furthermore, banks will integrate NADRA’s Diminished Fingerprints API, a specially designed feature for elderly citizens whose fingerprints may no longer be readable due to aging. 

In such cases, facial recognition technology will provide an alternative verification method, ensuring that no deserving pensioner is denied access to their pension.

The adoption of the e-Sahulat App at bank branches is also expected to significantly simplify the process for pensioners who still prefer in-person assistance. Through this facility, bank staff will be able to digitally process and verify pensioners within minutes.

Officials estimate that nearly 1.7 million federal and provincial pensioners across Pakistan will benefit from the new system. But for the state to benefit, the system needs further overhaul and upgradation. Is the state willing to carry out the tougher reforms?