Burgeoning unfunded pension liabilities: Aurangzeb backs raising retirement age to 62

ISLAMABAD: Minister for Finance Muhammad Aurangzeb on Friday highlighted the fast ballooning of unfunded pension liabilities and extended his support for the idea of increasing the retirement age from 60 to 62 years.

During the Senate Standing Committee on Finance meeting, chaired by Senator Saleem Mandviwalla, to finalise recommendations on the Finance Bill 2025-26, Minister for Finance Muhammad Aurangzeb stated that the unfunded pension liabilities were huge, so the government undertook pension reforms to stop the bleeding. The Defined Contributory Pension, he said, had already been implemented last year (for civilians only). Senator Farooq H Naek, belonging to PPP, 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 for 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. Minister for Finance cited the example of his previous banking sector job and stated that he had got approval from increasing retirement age from 60 to 65 years.

However, Ministry of Finance official apprised the committee that the increasing retirement age would not help saving any substantial amount because the Army personnel got retired much earlier and major chunk of pension bill generated to pay their pension. The Ministry of Finance shared a detailed presentation on budgetary numbers for 2025-26 and stated that the government allocated Rs510 billion for special package for Army, Navy and Air Force in the budget for 2025-26 against Rs463 billion in the outgoing fiscal year.

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of seeking certificate from Income Tax Commissioner for buying property was totally unacceptable so it should be withdrawn.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.”