Pakistan Pension Guide 2026

EOBI Defined Benefit Pension

The Employees Old-Age Benefits Institution (EOBI) provides a defined benefit (DB) pension for private sector workers. The pension amount is very low — between PKR 8,500 and PKR 10,000 per month (approximately $30-35 USD). Eligibility requires a minimum of 15 years of insurable employment (reduced to 5 years for a reduced pension). The pension is calculated based on years of contribution and average minimum wage. Despite its low value, EOBI covers over 7.5 million registered workers. The pension is adjusted periodically but increases have not kept pace with inflation. Survivor pensions (75% of the insured's pension) and invalidity pensions are also available.

Civil Servants Pension

Civil servants in Pakistan enjoy a non-contributory defined benefit pension — they do not contribute to their pension during service. The pension is calculated at 70% of the last drawn pay (basic pay + admissible allowances). Key features: commutation option (lump sum payment of 35% of pension in exchange for reduced monthly pension for 15 years), family pension (50% of pension to spouse after death), and annual increases (through ad-hoc relief allowances). The pension is fully funded from the federal budget. The civil service pension liability has grown significantly, consuming over 25% of the federal revenue in recent years, making it a major fiscal sustainability concern.

Provident Fund

The Provident Fund is mandatory for many companies in Pakistan under the Provident Fund Act 1925 (and related labor laws). The standard contribution is 1 month's basic salary per year from both employee and employer (i.e., 8.33% of basic salary each, for a total of 16.67%). The fund is invested in approved securities (government bonds, bank deposits). Provident Fund accumulations are paid out at retirement, resignation, or death. Employer contributions vest according to fund rules (typically after 5-10 years of service). The Provident Fund is the primary retirement savings vehicle for most formal sector employees, as the EOBI pension alone is insufficient.

Retirement Ages

Private sector: The standard retirement age is 60 years (applicable to most private sector employees under labor laws). Some companies may have different contractual retirement ages. Early retirement is generally at the discretion of the employer.

Government sector: The retirement age for civil servants is 60 years. High court and Supreme Court judges retire at 65. Early retirement is possible after 25 years of service (with reduced pension). The government has periodically considered raising the retirement age to reduce pension costs, but this remains politically sensitive.

No National Private Sector Pension System

Pakistan does not have a mandatory national private sector pension system beyond the minimal EOBI scheme. Unlike countries with mandatory private pension pillars (like Australia's Superannuation or Chile's AFP system), Pakistan relies on the EOBI pension (very low benefit) and voluntary Provident Funds. There is no dedicated regulatory framework for private pension plans, though insurance companies offer voluntary annuity products and the SECP regulates voluntary pension funds under the Voluntary Pension System (VPS) Rules 2005.

FAQs

Can I receive both EOBI and civil service pension?

No, civil servants are typically not covered by EOBI. The civil service pension is a separate, more generous system. Private sector workers who move to government service may have their EOBI contributions refunded or preserved.

What happens to my Provident Fund if I leave my job?

You can transfer your Provident Fund accumulations to your new employer's Provident Fund, or withdraw them subject to tax rules. Early withdrawals (before retirement age) may be subject to income tax on the employer's contribution portion.

Is there a minimum pension guarantee?

EOBI provides a minimum pension of approximately PKR 8,500/month for those meeting the 15-year contribution requirement. There is no national minimum pension guarantee beyond EOBI.

Disclaimer

This guide provides general information about Pakistan's pension system for 2026. Rules and amounts are subject to change. Always consult with a qualified professional for advice specific to your situation. InvestmentKit does not provide financial advice.