(rent/sale of land, equipment, animals), (5) income from non-agricultural assets (rent/sale of household’s land, enterprise land and equipment, as well as imputed rental Income from living in own dwelling), (6) income from financial assets (including jewelry, insurance, providence and lending), as well as (7) transfers from pensions, sadqa, inheritance, and other sources.

- **Age of the household head:** Age of the self-reported head of the household.

- **Elderly:** Individuals aged 65 or above. When considering household wealth accumulated over the life cycle, we consider households where the head is between 60 and 65, which is the typical range of retirement ages offered by formal pension systems around the world (60 in Pakistan). It corresponds to the age range at which individuals are generally expected to switch from being a net saver to being a net dis-saver.

- **Education of the household head:** Schooling attainment of the self-reported household head. It is categorized into Primary (or less), Secondary, or Tertiary education.

- **Rural:** Whether the household resides in an urban or rural area.

# **4. Pension programs, private savings, and other economic resources in old age in Pakistan**

## 4.1 Pension programs

Most of Pakistan’s working population is not covered by formal contributory social protection programs. Estimates suggest that formal wage employment is only 14 percent of all employment, out of which 7 to 8 percent are in the public sector and are covered by a tax-funded scheme for government employees. The rest is composed of 23 percent informal wage employment, 47 percent self-employment and 15 percent unpaid work (Choo and Majoka, 2020).<sup>4</sup> Informality has not evolved significantly over time: it was around 87.5 percent in 2008 compared to 88.5 percent in 2017.<sup>5</sup> Informality is pervasive across the income distribution: 70 percent of jobs in the top income quintile are informal (HIES 2016). Additionally, more than 40 percent of informal jobs in the top quintile correspond to non-agricultural self-employment. On the lower end of the income distribution, informality is associated with lower productivity or poor working conditions.

The Employees’ Old Age Benefits Institution (EOBI), at the federal level, provides age, disability and survivors pensions through a voluntary pension scheme to private sector employees on a self-registration basis. Only around 1.5 of 40 million workers were insured under the scheme in 2000 (Mahmood and Nasir, 2008). The Employees Social Security Institutions (ESSls) at the provincial level provide health services (through Social Security Hospitals, medical centers and dispensaries) and some cash benefits to employees of registered establishments. Punjab’s ESSI serves above 2.5 million patients every year and requires the employers to contribute 6 percent of the wages of their employees (having wages up to PKR 18,000).

While no non-contributory social pension exists in Pakistan, there are several well-established social protection programs to assist households in poverty. The main safety net program, run at the federal level, is an

> 4 The definition of informal employment used by the Pakistan Jobs Diagnostic is anyone without a formal employment contract. NOTE: The International Labor Organization (ILO, 2013) distinguishes between _the informal sector_ , which refers to the formality of production units and is usually linked to firms’ registration, and _informal jobs_ , which refer to workers’ type of employment.

> 5 These findings are based on the Labor Force Surveys of 2008 and 2017.

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