The federal government of Pakistan has recently introduced a Contributory Pension Fund Scheme as part of its efforts to reduce the financial burden of pensions on the national treasury. This new scheme officially took effect on July 1, 2024, marking a significant shift in how pensions will managed for government employees in the country.
Who Will Be Affected?
The Contributory Pension Scheme applies to:
- Federal civilian employees hired from July 1, 2024 onwards.
- Military personnel recruited in the upcoming fiscal year.
Existing employees, whether in civilian or military roles, will not affected by this scheme, ensuring that it primarily targets new hires.
Contribution Structure
Under the new pension scheme:
- Employees will contribute 10% of their basic salary to the pension fund.
- The federal government will contribute 20%.
This marks a shift from the earlier non-contributory pension system, where the government fully funded pensions. The shared contribution intended to reduce the long-term financial burden on the state while ensuring employees actively participate in securing their post-retirement benefits.
Fund Allocation
For the current fiscal year, the federal government has allocated a significant amount of 10 billion rupees to kickstart the Contributory Pension Fund. This allocation shows the government’s commitment to ensuring the sustainability of the pension system.
Why the Change?
Over the years, the pension expenses for government employees have grown substantially, putting immense pressure on the national budget. The Contributory Pension Fund Scheme designed to:
- Reduce the increasing financial load on the treasury.
- Ensure a sustainable pension system for future employees.
Official Notification
The Ministry of Finance has issued an official notification detailing the implementation of this new pension scheme. It clearly outlines that all federal employees hired after July 1, 2024 will fall under this scheme, aligning with the government’s broader fiscal management goals.
The introduction of the Contributory Pension Scheme represents a major step in managing Pakistan’s pension liabilities. With a balanced contribution from both employees and the government, this scheme aims to create a more sustainable pension system, ensuring future employees have a secure retirement while easing the burden on the national budget.
