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October 17, 2023
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December 3, 2023

EOBI — a poverty manufacturing machine

Pakistan uses state institutions to deprive 90% of its workforce of their legal right to old-age benefits

 Out of approximately 75 million formal and informal workforce, the Employees Old-age Benefits Institution (EOBI) has only 9.8 million workers registered on its roll. This makes Pakistan the only country in the world that uses state institutions to deprive 90% of its workforce of their legal right to old-age benefits. It simply excludes approximately 65 million workers from the ambit of the EOBI. Can EOBI be radically reformed to become an effective organisation that can identify, register and provide for the pension needs of every citizen in Pakistan? Here is how it can be done.

The existing EOBI is a bureaucratic setup that has no capacity for new ideas, technology or change. Wasting more time with EOBI is akin to pumping more money in PIA or Steel Mill. The EOBI Board of Trustees ought to be reconstituted, to have 8 members instead of 16, with only one representative from Federal Government i.e. the chairperson EOBI. The remaining members must be chosen from private sector for their expertise in management, investment, IT and law.

EOBI ought to be declared a universal scheme and pension a fundamental right of every worker, regardless of the employer or the nature of job — industrial, agricultural, commercial, domestic, permanent, temporary, regular or contractual. It should be applicable to every employer even if it has only one employee. An unemployed or self-employed individual should also be eligible for registration by personally contributing the requisite amount. This would enable every Pakistani citizen above 18 to become a part of the national pension scheme.

EOBI registration ought to be hugely simplified and linked with NADRA. The EOBI registration number should be the same as the CNIC of an individual. EOBI organisation must develop an online database that reflects the name, CNIC, phone number, employer’s name, monthly EOBI contribution and total contribution made against the CNIC of every registered citizen of Pakistan. The current EOBI database is dysfunctional.


The EOBI monthly contribution rate ought to be standardised across Pakistan to enable seamless payments for workers changing jobs or locations. A suggested rate is 7% of the minimum legal wage, of which 5% should be contributed by the employer, 1% by the employee and 1% by the state. This percentage should be linked with and changed with the change in minimum legal wage.

Every individual’s monthly pension ought to automatically transferred to his/her bank or phone account such as the SBP’s Asaan Mobile Account and the worker must receive an automatic SMS, by the 10th of each month to confirm if the EOBI on his/her behalf has been deposited or not. The SMS must also confirm the latest amount deposited as well as the grand total. The payment to EOBI must be significantly simplified, and electronically enabled, without involving any transfer fee or visiting a bank. Kenya’s highly successful M-pesa mobile phone based pension scheme is something that Pakistan could emulate.

On reaching the age of 60 years, every worker should be given a choice to either opt for the normal monthly pension or to accept the lumpsum amount accumulated during his/her entire years of contribution. In case the worker opts for the lumpsum amount, it must be immediately deposited in the individual’s bank account, without any bureaucratic hassles or runarounds.

EOBI has been rendered dysfunctional by its compromised registration and collection system that is dependent on EOBI inspectors visiting each factory and making under-the-table deals. No inspector must visit any employer and the entire system of EOBI (employers and employees) ought to be digitally executed and monitored. All payments must be electronically transferred to EOBI by 10th of every month, with an escalating fine for each day of delayed payment. Heavy prison terms should be introduced for the employers (owner, CEO and COO) if the EOBI payments are not made by the 30th of any month. This is the only way the state can defend the interest of its workers.

Naeem Sadiq

Published in The Express Tribune, November 19th, 2023.