Mushtaq said the decision to sideline Pietersen had been on the cards for a long time because of his differences with the coach. (Agencies)
Speaking on a talk show, Mushtaq, however, noted the decision by the ECB to sideline 33-year-old Pietersen was an example of the fact that the system was stronger than an individual in English cricket.
"There were problems as far as Pietersen were concerned for the last few years but things were managed as the team was doing well and winning.
"But eventually it had to happen and I was aware of this as I used to spend lot of time with Pietersen and worked with him in the nets and listened to him," he said.
The ECB announced Pietersen was no longer part of its plans for the England team soon after head coach Andy Flower stepped down after the Ashes defeat.
Mushtaq said that he had returned to Pakistan in the middle of the Ashes series but the defeats suffered by England in the series eventually led to the decision by the ECB to sideline Pietersen.
Despite being axed by the ECB, the South Africa-born batsman fetched the highest bid at the IPL players auction on Thursday being sold for a whopping amount of 881,000 pounds to Delhi Daredevils.
Mushtaq said Pakistan needs to realise it was time for them to set their house in order.
"We need to have a proper system in place in our country because we are wasting away talent and not meeting our targets because of this," he said.
The former leg spinner said the rapid changes in the team management and in the board had adverse effects on the team and Pakistan cricket.
"Thinking positively, we need to first have a system and then planning. We are number six in the world today and we need to set small targets and be patient but for this, first the system has to work where no one is bigger than the system or institution," he added.
Mushtaq said the decision to sideline Pietersen had been on the cards for a long time because of his differences with the coach.