FinMin supports raising retirement age to 62 amid pension funding crisis

• Bureaucrats' age can be increased like that of judges: Senator Naek
• Senator Rahman argues retirement age can be up to 65-70 years.
• Ministry shares govt's allocation for special package for forces.

ISLAMABAD: Highlighting the fast ballooning of unfunded pension liabilities, Finance Minister Muhammad Aurangzeb has extended his support for the idea of increasing the retirement age from 60 to 62 years, The News reported on Saturday.

Speaking during the Senate Standing Committee on Finance meeting chaired by Senator Saleem Mandviwalla aimed at finalising recommendations on the Finance Bill 2025-26, Aurangzeb stated that the unfunded pension liabilities were huge, so the government undertook pension reforms to stop the bleeding.

The finance czar's remarks come as Prime Minister Shehbaz Sharif-led government has proposed a 10% hike in the salaries of government employees along with a 7% increase in the pension of retirees in the Rs17.57 trillion budget for the Fiscal Year 2025-26 along with an increase in the monthly allowance for differently abled employees was proposed to increase to Rs6,000 from the current Rs4,000.

Expanding on the pension issue in the Senate panel's meeting, the finance minister underscored that the Defined Contributory Pension had already been implemented last year — for civilians only.

During the meeting, PPP's Senator Farooq H Naek proposed to the government to increase the retirement age from 60 to 62 years in order to curtail the escalation in the pension bill. 

He said that if the age of the judges could be increased, why the same policy could not be applied to the bureaucrats. Senator Naek said that the retirement age of 60 resulted in taking away an experienced person who could serve more.

Senator Anusha Rahman also supported it and argued that the retirement age could be extended to 65 or even 70 years. Aurangzeb further cited the example of his previous banking sector job and stated that he had got approval to increase the retirement age from 60 to 65 years.

However, he apprised the committee that the increasing retirement age would not help save any substantial amount because the army personnel retired much earlier and a major chunk of pension bill was generated to pay their pension.

The Ministry of Finance also shared a detailed presentation on budgetary numbers for 2025-26 and stated that the government allocated Rs510 billion for a special package for the Pakistan Army, Pakistan Navy and Pakistan Air Force in the budget for 2025-26 against Rs463 billion in the outgoing fiscal year.

Meanwhile, Senator Faisal Vawda said that the NFC made it hard to balance the numbers of budget making for the federal government so it requires changes.

He said that the requirement of seeking a certificate from the Income Tax Commissioner for buying property was totally unacceptable so it should be withdrawn. He also proposed to provide similar incentives for both seller and purchaser of properties. He also asked the finance minister to abolish 7E in the budget for 2025-26.

Responding to the long-standing debate on agricultural taxation, he asserted: "Earlier it was said agriculture tax can never be imposed. Now, they say it can't be collected. We will collect it — just give us the chance. provinces are set to begin agricultural income tax collection from July 1, 2025".