If you employ people in Pakistan, EOBI is one of the first compliance obligations you will meet — and one of the most commonly mismanaged. This guide answers the questions employers actually ask us, in plain language.
What is EOBI?
The Employees' Old-Age Benefits Institution (EOBI) is Pakistan's federal pension scheme. Employers and employees contribute monthly, and in return registered employees become entitled to old-age pension, invalidity pension, survivor's pension, and old-age grants after meeting the qualifying conditions.
For employees, it is often the only formal retirement benefit they will ever receive. For employers, it is a legal obligation — not an optional benefit.
Which employers must register?
Under the EOBI Act, registration is generally required once a business employs the threshold number of workers (historically five or more employees, with provinces and amendments adjusting applicability over time). In practice, our advice is simple: if you run a registered business with employees, register with EOBI early. Waiting until an inspection forces the issue leads to backdated demands that are far more painful than routine monthly compliance.
Registration covers both the employer (who receives an employer registration number) and each employee (who receives an EOBI insurance number they keep for life, across jobs).
How are contributions calculated?
EOBI contributions are calculated as a percentage of the minimum wage, not the employee's actual salary:
- Employer share: 5% of the applicable minimum wage
- Employee share: 1% of the applicable minimum wage (deducted from salary)
Because the amounts are pegged to minimum wage, the rupee figures change whenever the government revises the minimum wage — typically announced with the federal or provincial budget. Always confirm the current applicable amounts, and update your payroll the month a revision takes effect.
Contributions are due monthly, and late payments can attract surcharges.
The mistakes we see most often
Working with payroll data across many Pakistani businesses, the same EOBI mistakes appear again and again:
- Registering the company but not new employees. Every new hire must be registered — onboarding checklists should include it.
- Forgetting minimum-wage revisions. Payroll keeps deducting last year's amount months after a revision, creating arrears.
- Paying but not maintaining records. In a dispute or audit, your payment history and employee registration records are your defense. Keep them organized and retrievable.
- Treating contractual or piece-rate staff as exempt. Coverage rules are broader than many employers assume — get clarity before excluding anyone.
- Manual calculation errors. When EOBI, income tax, provident fund, and social security are all computed by hand in spreadsheets, mistakes compound quietly until they surface as penalties.
How software removes the risk
The pattern behind every mistake above is the same: manual tracking of rules that change. This is exactly what payroll software is for.
Our payroll platform Payrolio was built for Pakistani compliance specifically — EOBI contributions, provident fund, SESSI/PESSI, gratuity, and FBR salary tax are calculated automatically for every employee, every month, with revision updates applied centrally. Contribution histories stay attached to each employee record, so audit questions take minutes instead of days.
If payroll compliance is taking your team more than a few hours a month — or if you are not fully certain your EOBI numbers are right — see how Payrolio handles it or talk to us for a walkthrough.
Quick employer checklist
- Employer registered with EOBI
- Every current employee registered with an insurance number
- New-hire registration added to your onboarding checklist
- Contribution amounts match the current minimum wage
- Monthly payments made on time, with receipts archived
- Contribution history retrievable per employee
For the wider picture beyond EOBI, read our complete payroll compliance checklist for Pakistani employers.
