A comfortable retirement in Pakistan today costs about Rs 80,000–120,000 per month. If you rely only on EOBI (~Rs 10,000/month), you’ll fall dramatically short. Here’s a practical 2026 playbook for building a Rs 100,000 monthly pension using life insurance, VPS and disciplined saving.
The maths behind Rs 100,000/month
To pay Rs 100,000/month indexed to inflation for 20 years, you need a retirement corpus of roughly Rs 25–30 million at age 60 (assuming a real return of 3–4% after inflation).
Building the corpus — three pillars
Pillar 1: State Life Retirement Income Plan
A guaranteed pension vehicle from Pakistan’s only government-backed insurer. Contributions during working years, guaranteed monthly pension after retirement, with optional lump sum.
Example: Age 30, Rs 30,000/month contribution for 30 years → estimated corpus Rs 20–25M and monthly pension Rs 100,000–130,000.
Pillar 2: Voluntary Pension Scheme (VPS)
Under SECP’s Voluntary Pension System rules, you can:
- Contribute up to 20% of income tax-free (Section 63).
- Get extra 2% tax rebate for each year above age 41.
- Withdraw up to 50% tax-free at retirement; balance for regular income.
Pillar 3: Direct investments
Complement with:
- Government bonds / T-bills / Sukuks for stability.
- Mutual funds / ETFs for growth.
- Real estate (rental income) for hard-asset cushion.
Sample plan for a 30-year-old earning Rs 250,000/month
| Vehicle | Monthly Contribution | 30-Year Corpus (est.) |
|---|---|---|
| State Life Retirement Income | Rs 30,000 | Rs 22M |
| Voluntary Pension Scheme (VPS) | Rs 15,000 | Rs 11M |
| Mutual funds SIP | Rs 10,000 | Rs 8M |
| Total | Rs 55,000 | Rs ~41M |
That comfortably delivers Rs 100,000+ per month for a 20-year retirement, indexed to inflation.
Rules of thumb
- Start before age 35 — the last 10 years of compounding do the heavy lifting.
- Automate contributions on 1st of the month.
- Add annual increments (5–10% of contribution) to beat inflation.
- Never touch retirement corpus for interim expenses.
- Review annually with a financial advisor.
Frequently asked questions
Is the retirement pension taxable?
Pension income above the exemption threshold is taxable at slab rates. Lump-sum commutation up to 50% of accumulated balance is tax-free under current rules.
Can I take a lump sum at retirement instead of monthly?
Yes — you can opt for a partial lump sum + reduced pension.
What if I retire early?
Most retirement plans allow early retirement from age 55, with proportionally reduced pension.
Model your own retirement plan — try our calculator (Retirement tab) or talk to a certified advisor.