Pakistan introduces new pension scheme for govt employees

The federal government has introduced a new contributory pension scheme for both federal employees and members of the armed forces.

According to a notification from the Ministry of Finance, this new system will require a total contribution of 22% to the pension fund. Out of this, employees will contribute 10% of their salary, while the government will add 12%.

To start the system, the government has allocated Rs10 billion for the new pension fund. The move comes as Pakistan faces a growing financial burden from pensions, which are projected to reach Rs1 trillion and 55 billion by 2024. For the armed forces, pension expenses are expected to climb to Rs742 billion by 2025.

Who Will Be Affected

The new pension system will not affect current government employees. It will apply only to those hired after July 1, 2024. For the military, it will take effect from July 1, 2025.

Key Features

Under this scheme, employees cannot withdraw money from their pension accounts before retirement. However, once they retire, they will be allowed to withdraw up to 25% of their total savings.

The Ministry of Finance also confirmed that a Non-Banking Financial Company (NBFC) will be set up to manage the pension fund professionally. This step follows recommendations from global financial organizations, including the World Bank.

The government hopes this new system will make pensions more financially sustainable, transparent, and secure for future employees.

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