Apex constitutional court expands pension eligibility for private sector employees

ISLAMABAD: The Federal Constitutional Court has directed the Employees’ Old-Age Benefits Institution (EOBI) to begin paying monthly pensions to eligible workers, extending long-awaited relief to thousands of retirees, especially those belonging to the private sector.

The court has ordered that all petitioners be granted old-age pensions and clarified that employees who have completed more than 14 years and six months of service qualify for benefits, even if they fall short of the 15-year mark. Under the ruling, any service period of six months or more will be counted as a full year when determining pension eligibility.

A three-judge bench led by Chief Justice Aminuddin Khan issued the decision, rejecting all appeals filed by EOBI. The court upheld earlier Lahore High Court (LHC) judgments from 2024 and 2025, stating they were legally sound and required no modification.

In its reasoning, the court noted that the pension schedule is a core component of the law and cannot be overridden by administrative directives, including an EOBI circular issued in 2022. It noted that applying welfare laws too narrowly undermines their purpose and results in unfair outcomes for workers.

The judges further ruled that pension cases will follow the principle of rounding off, meaning employees with more than 14.5 years of service will be treated as having completed the required 15 years.

The government has also formed a committee to expand EOBI coverage to workers in the informal economy, including domestic staff and agricultural laborers.

Under the EOBI framework, insured individuals are entitled to benefits such as old-age pensions upon retirement, invalidity pensions in cases of permanent disability, survivor pensions for dependents, and old-age grants for those who reach retirement age without meeting the minimum service requirement.