The discussion does not distinguish between the two distinctive retirement plans provident fund and pension the ramifications of which are very different . The provident fund is fully funded by contribution by employee and by government . Assuming government is funding its contribution this is not posing a problem . The other category pension is the problem . The government has not created a separate fund which is funded each year. This has not been funded each year through contributions and this unfunded pension liability is the gross indiscipline of government which is the problem . As this is what is causing the large pension expense which is the result of not funding this liability in the past . Such gross negligence would have resulted in severe penalties against a private employer why not the government
Separately most employers globally have realised that pension plans are not affordable and instead has been replaced exclusively with provident fund . Pakistan is a poor country it is criminal that it has not finished pension and replaced with provident . The other major benefit of provident fund it crystallises the total cost of employment of an employee in the year of employment . This is lost in an unfunded pension which is overlaying in the current year the cost of past employment which is causing the mushrooming of pension expenses in future years
