The Federal Constitutional Court of Pakistan has dismissed National Bank of Pakistan’s appeal in a long running pension dispute, entitling the bank’s pensioners to receive pension increases announced by the government.
According to NBP’s material disclosure, the court announced its reserved judgment on September 16 in Civil Appeal No. 1688/2021, titled National Bank of Pakistan & others vs. Khawaja Abdul Hameed Nasir & others. NBP said the full text of the judgment is still awaited.
The case involves a separate class of NBP pensioners seeking adjustment for government announced pension increases. The pension charge broadly comprises the pension factor and cost of living or government announced pension increases, according to a note by Topline Research.
On the government announced increases, the Lahore High Court ruled in favor of pensioners in 2016 and directed NBP to extend such increases to its pensioners broadly. The Supreme Court subsequently suspended the Lahore High Court order and, under the main pension case, directed payment of the increases only to pensioners who were party to the litigation. The latest ruling, according to Topline Research’s, extends the benefit to non petitioners as well.
The ruling could have an additional impact on NBP’s earnings, although the amount cannot yet be determined because the detailed judgment is pending. Topline Research said its channel checks indicate that NBP management might book an additional provision related to the ruling, but the quantum remains uncertain.
NBP had already recognized a one time charge of Rs. 57.5 billion in 2024 for past service pension costs. This took total pension fund costs to Rs. 72.6 billion in 2024, compared with Rs. 4.4 billion in 2023, including the recurring impact. Topline Research estimates that every additional Rs. 5 billion provision could have an after tax impact of Rs. 1.1 to Rs. 1.3 per share on earnings.
Pension fund costs declined to Rs. 8.7 billion in 2025, primarily reflecting an easing in the discount rate to 11.0 percent, according to Topline Research. At the same time, benefits paid by NBP increased sharply to Rs. 20.0 billion in 2024 from a historical annual run rate of around Rs. 1.7 billion to Rs. 1.8 billion between 2021 and 2023.
The increase in benefit payments pushed NBP’s net payable pension liability to Rs. 75.6 billion in 2024 from Rs. 22.9 billion in 2023. The pension fund liability stood at Rs. 75.3 billion in 2025, according to the figures provided by Topline Research. These figures relate only to the pension fund and exclude medical benefits, gratuity schemes and other employee benefit obligations.
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