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Jan 19, 2021

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02:00 min read

Tontines offer a solution to Pakistan's pension reform

Pension manager Nadeem Jeddy argues in the Dawn newspaper for reforming Pakistan's public pensions using tontines

Dean McClelland

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Nadeem Jeddy of Magnus Investment Advisors in Karachi has written for the Dawn to explain how tontine pensions offer a better means for Pakistan's public pensions reform than destroying the government official's security of lifelong incomes.

Nadeem argues that Government employees will be forced to take greater interest in personal finance & that this could lead to new forms of malfeasance will emerge that will be hard to catch and difficult to reverse.

The full article is definitely worth a read and in fact can be applied to almost any funded, or underfunded government pension scheme around the world.

(Pakistani) Government employees need lifelong incomes to stay independent and promote public interest.

Replacing public pensions with traditional defined contribution (DC) schemes like Voluntary Pension System (VPS) and provident funds (PFs) will destroy the security of lifelong incomes. Government employees will be forced to take greater interest in personal finance. New forms of malfeasance will emerge that will be hard to catch and difficult to reverse.

A better alternative would be to offer a superannuation fund with tontine features.

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