Pakistan International Airlines (PIA) faces a substantial liability of approximately Rs40 billion toward the PIA Employees’ Pension Trust Fund, as revealed by The Aviation Law Firm on behalf of a group of senior management retired employees.
A significant portion of this liability, around Rs30 billion, was disclosed in PIA’s annual accounts for December 2022. However, according to a public notice issued by The Aviation Law Firm, this reported figure does not account for accrued interest on the liability or contributions to the Defined Contribution (D.C.) fund, which was later merged into the Pension Trust Fund. As a result, the actual liability is expected to surpass Rs40 billion.
The liability reportedly arose due to the misuse of the Pension Trust Fund for operational expenses, which is a violation of Trust Fund regulations. In 2024, Rs20 billion of this liability was transferred to PIA-HOLDCO under an extralegal agreement involving the Privatization Commission of Pakistan and PIACL.
The notice emphasizes that under Section 6 of the PIA Conversion Act 2016, all retirement benefits must not be altered to the disadvantage of employees and retirees. Furthermore, the Trust Fund Laws of Pakistan mandate that Trust Fund investments be handled in a way that safeguards the interests of the beneficiaries.
Senior management retired employees have initiated legal proceedings, titled Irshad Ghani & Others versus the Federation of Pakistan, in the Lahore High Court. The petition seeks to determine the actual value of the Pension Trust Fund and ensure the continuation of retirees’ rights and benefits.
The Aviation Law Firm warns prospective buyers of PIA that these pension liabilities will transfer to the new shareholders. The firm urges potential buyers to include these liabilities, including the replenishment of the Pension Fund and the cost of maintaining retirees’ medical and passage benefits as guaranteed by the PIACL Act 2016, in their bid calculations.
The notice concludes by emphasizing the importance of thorough due diligence regarding these obligations before submitting bids for the airline.
