Pension System Reforms For Pakistan: Current Situation And Future Prospects

Pension Systems Are Intended To Give An Income Support To Those Individuals Who Bear A Loss In Earning Capability During Old Age, Incident Of Disability Or Death Of Wage Earner In The Family. Thus, Pension Systems Aim To Reduce Poverty Among The Old Individuals And Strive To Smooth Consumption Between The Working Years And The Retirement Years, In Such A Way That Individuals Do Not Bear A Massive Drop In Living Standards When Old Age And Disability Reduces Their Earning Ability. The Former Objective Is Obtained Through Non Contributory Pension System And The Later Through Contributory Pension System. Most Formal Pension Systems Around The World Are Publicly Managed, Pay Defined Benefits, And Are Financed By Payroll Taxes On A Pay-As-You-Go Basis. In Pay-As-You-Go Pension System Current Workers’ Contributions Are Used To Pay Pension Benefits To Current Retirees.