"" "" # *Detailed SUMMARY of the article "Pension bill" by Editorial, Published in Dawn on June 19th, 2025:* The article highlights *Pakistan*'s critical *pension crisis*, where the *federal government*'s annual *pension burden* now exceeds its *fiscal space* for *national development*. The government spends more on *retired civil servants* and *armed forces personnel* than on *physical infrastructure*, *social development*, *basic services*, and *public utilities*. *Finance Minister Muhammad Aurangzeb* described this as a *"fundamental question of macroeconomic sustainability"* and emphasized the need to *"stop the bleeding"*. The government introduced the *Defined Contribution Pension Scheme* at the start of the current *fiscal year* and banned *double-dipping* (drawing both *salaries* and *pensions*) for *rehired ex-civil servants* in *April*. However, *armed forces personnel* remain exempt from both reforms, despite their *pensions* accounting for *three-fourths* of the total *pension bill*. The *contributory pension scheme* for *armed forces* was supposed to begin in *July* but has been *delayed without explanation*. *Military personnel* retire at *earlier ages* than *civil servants*, meaning they draw *pensions* for *longer periods* while often finding *gainful employment elsewhere*. The *finance minister* acknowledged this *significant burden* on the *federal budget* during a *Senate Standing Committee* meeting. The article criticizes that *pension reforms* only apply to *new hires* rather than existing pensioners, limiting their effectiveness. Additionally, there are *discrepancies* between the *finance minister*'s statements about *tax exemptions* for *pensioners above 70* and the actual provisions in the *Finance Bill 2025*. The editorial calls for *clarity* and *comprehensive reforms* to address the *pension crisis* that threatens *Pakistan*'s *economic growth* and *development prospects*. # *Easy/Short SUMMARY*: *Pakistan*'s *pension bill* exceeds *national development spending*, creating a *fiscal crisis*. *Finance Minister Aurangzeb* introduced *pension reforms* including *Defined Contribution Scheme* and *double-dipping* ban for *civil servants*. However, *armed forces personnel* (accounting for *75%* of pension costs) remain exempt despite *early retirement* and *longer pension periods*. Reforms only apply to *new hires*, and *discrepancies* exist in *Finance Bill 2025* regarding *tax exemptions*. # *SOLUTIONS of The Problem*: ## *1. Apply Reforms to Armed Forces* Implement *contributory pension scheme* for *military personnel* without further delays. ## *2. Extend Reforms to Existing Pensioners* Apply *pension reforms* to current retirees, not just *new hires*. ## *3. Standardize Retirement Ages* Align *military retirement age* with *civil service* to reduce *pension duration*. ## *4. Means Testing for Pensions* Assess *financial need* before paying pensions to *employed retirees*. ## *5. Clarify Finance Bill Provisions* Resolve *discrepancies* between *ministerial statements* and *Finance Bill 2025*. ## *6. Gradual Implementation* Phase in *pension reforms* over time to minimize *resistance* and *disruption*. ## *7. Increase Retirement Age* Raise *retirement age* across all sectors to reduce *pension burden*. ## *8. Cap Maximum Pensions* Set *upper limits* on *pension amounts* to control *fiscal costs*. ## *9. Alternative Investment Options* Provide *voluntary pension schemes* with *private sector* participation. ## *10. Regular Pension Audits* Conduct *annual reviews* of *pension eligibility* and *payment accuracy*. # *IMPORTANT Facts and Figures Given in the article*: - *Federal government*'s *pension burden* exceeds *fiscal space* for *national development*. - *Armed forces pensions* account for *three-fourths* of total *pension bill*. - *Defined Contribution Pension Scheme* took effect at start of current *fiscal year*. - *Double-dipping* ban implemented in *April 2025*. - *Contributory pension scheme* for *armed forces* was scheduled for *July 2025*. - *Military personnel* retire at *earlier ages* than *civil servants*. - *Finance Bill 2025* contains *discrepancies* regarding *tax exemptions*. # *IMPORTANT Facts and Figures out of the article*: - *Pakistan*'s *pension liability* is approximately *Rs. 8 trillion* (*Ministry of Finance*, 2024). - *Pension payments* consume *2.5%* of *GDP* annually (*World Bank*, 2024). - *Average military retirement age* is *45-50 years* vs *60 years* for *civil servants* (*PILDAT*, 2024). - *Pakistan* spends *3.2%* of budget on *pensions* vs *2.1%* on *development* (*IMF*, 2024). - *Pension costs* increased *400%* over last *decade* (*State Bank of Pakistan*, 2024). - *OECD average* for *pension spending* is *7.7%* of *GDP* (*OECD*, 2024). # *MCQs from the Article*: ### 1. *What portion of the pension bill do armed forces account for?* A. Half B. Two-thirds *C. Three-fourths* D. Four-fifths ### 2. *When was the double-dipping ban implemented?* A. March 2025 *B. April 2025* C. May 2025 D. June 2025 ### 3. *Who described pension reforms as a "fundamental question of macroeconomic sustainability"?* A. Prime Minister *B. Finance Minister Muhammad Aurangzeb* C. Senate Chairman D. Planning Minister ### 4. *When was the contributory pension scheme for armed forces supposed to begin?* A. June 2025 *B. July 2025* C. August 2025 D. September 2025 ### 5. *What age group did the finance minister mention for pension tax exemption?* A. Above 65 B. Above 68 *C. Above 70* D. Above 75 # *VOCABULARY*: 1. *Conundrum* (پیچیدہ مسئلہ) – A difficult problem with no clear solution 2. *Fiscal space* (مالی گنجائش) – Government's budgetary capacity for spending 3. *Tangible* (ٹھوس) – Clear and definite; real and concrete 4. *Macroeconomic* (کلان اقتصادی) – Relating to the overall economy 5. *Sustainability* (پائیداری) – Ability to maintain over time 6. *Contributory* (شراکتی) – Involving contributions from participants 7. *Double-dipping* (دوہرا فائدہ) – Receiving two benefits simultaneously 8. *Notification* (اطلاع) – Official announcement or order 9. *Gainful* (منافع بخش) – Profitable or beneficial employment 10. *Extensively* (وسیع پیمانے پر) – Over a wide area or range 11. *Exempted* (مستثنیٰ) – Freed from an obligation or requirement 12. *Defects* (خرابیاں) – Faults or imperfections 13. *Provisions* (شقوں) – Clauses or terms in legal documents 14. *Burden* (بوجھ) – Heavy load or responsibility 15. *Infrastructure* (بنیادی ڈھانچہ) – Basic physical structures and facilities 16. *Uplift* (بہتری) – Improvement or development 17. *Prospects* (امکانات) – Chances or possibilities for success 18. *Tightening noose* (تنگ ہوتا پھندا) – Increasingly restrictive situation 19. *Hurdles* (رکاوٹیں) – Obstacles or barriers 20. *Clarity* (وضاحت) – Clear and precise explanation 📢 *Attention Please!* We appreciate your commitment to acquiring knowledge through our summaries. Please be reminded not to remove the attribution label affixed to this article. It is crucial to acknowledge the source and the effort invested in creating this summary. We discourage any unauthorized distribution without proper credit. Thank you for your understanding and cooperation. 🔍 ⚡ *Explore More Summaries, Solutions, and Vocabulary Meanings* 💡 Join our WhatsApp Channel for timely and comprehensive summaries of the latest articles, along with well-crafted solutions and helpful vocabulary meanings. Click the link below to join now 🔗 [Dawn Article Summaries](https://cssmcqs.com/dawn-editorials-articles-summary-for-students-pdf-download/) *WhatsApp Channel Link*: [https://whatsapp.com/channel/0029Va7tT3o35fLnJeFbpS2y](https://whatsapp.com/channel/0029Va7tT3o35fLnJeFbpS2y) --- *dawn.com* *Pension bill* *Editorial* *~3 minutes* IT is, indeed, a worrying conundrum. The federal government's annual pension burden now exceeds its fiscal space for national development. In other words, Pakistan is paying out more to retired civil servants and armed forces personnel than it is spending on developing its physical and social infrastructure, basic services and public utilities. Pensions have become a tightening noose around our prospects for economic growth, human development and social uplift, which is why, after many years, we are finally seeing tangible measures to contain the pension bill. "We had to stop the bleeding," Finance Minister Muhammad Aurangzeb explained at a seminar on Tuesday as he spoke about the new Defined Contribution Pension Scheme that took effect at the start of the outgoing fiscal year. He seemed clear about the urgency for reforms, describing them as a "fundamental question of macroeconomic sustainability". In April, the government had also put an end to ex-civil servants drawing both salaries and pensions in case they were rehired after retirement. However, some key hurdles remain. The contributory pension scheme and rules preventing 'double-dipping' still do not apply to retired armed forces personnel, whose pensions account for around three-fourths of the total bill. Despite an earlier notification stating that the contributory pension scheme would apply to armed forces personnel from July this year, the measure has been delayed without explanation. Many armed forces personnel also retire at an earlier age than civil servants, meaning they draw pensions for a much longer period of their life. As pointed out by the finance minister last Saturday to the Senate Standing Committee on Finance, this represents a significant burden on the federal budget. Such retirees can often find gainful employment elsewhere, yet the government continues to pay out pensions without assessing their need. It is also questionable why the introduced pension reforms have not been made applicable more extensively instead of just on new hires. Surely, better results could be expected if more pensioners were subject to them. Similarly, defects have been pointed out in the latest steps regarding pensions. For example, though Mr Aurangzeb in his speech exempted pensioners above the age of 70 from being taxed on large pensions, it has been pointed out that the Finance Bill 2025 provides for no such exemption. The finance minister must address these points with clarity. *Published in Dawn, June 19th, 2025*