Pakistan Launches New Contributory Pension Scheme
The federal government has officially launched a new contributory pension scheme designed for future federal employees and the armed forces.
As per the details, the initiative aims to address the growing pension liabilities in Pakistan while ensuring a sustainable retirement system for upcoming recruits.
According to a notification issued by the Ministry of Finance, the new pension system requires a combined 22 percent contribution to the pension fund.
Federal employees will contribute 10 percent of their basic pay, while the government will provide a matching 12 percent share to strengthen the fund.
The government has earmarked Rs10 billion for the establishment of this fund, as pension liabilities have become a major fiscal challenge.
Reports suggest that total pension obligations could reach Rs1 trillion and Rs55 billion by 2024, with military pension expenses alone expected to climb to Rs742 billion by 2025.
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This new pension model will only apply to employees hired after July 1, 2024, while military personnel will join the revised framework from July 1, 2025.
It is worth mentioning that existing employees will continue under the current pension structure without any changes to their benefits.
Under the revised scheme, contributors will not be allowed to withdraw funds before retirement.
However, upon retirement, employees will be permitted to withdraw up to 25 percent of their total savings, ensuring both flexibility and long-term stability.
To manage the pension fund efficiently, the Ministry of Finance has confirmed plans to establish a Non-Banking Financial Company (NBFC).
The management structure of the fund has been developed with input from global financial experts, including the World Bank, to ensure transparency and compliance with international standards.
