ISLAMABAD – The federal government has launched a new contributory pension scheme, aimed at both federal employees and the armed forces.
The new system, as outlined in a notification by the Ministry of Finance, mandates a total contribution of 22% to the pension fund. Under this system, federal employees will contribute 10% of their salary towards the pension fund, with the government matching this contribution with an additional 12%.
The government has allocated a sum of Rs10 billion for the new pension fund, which has become a pressing issue in light of the growing pension liabilities.
As of 2024, the pension obligations are expected to soar to Rs1 trillion Rs55 billion. For the armed forces, the pension expenditure is projected to reach Rs742 billion by 2025.
The new pension system will not apply to current government employees but will come into effect for employees recruited after July 1, 2024. For military personnel, the new pension scheme is expected to be enforced from July 1, 2025.
One key feature of the scheme is that employees will not be able to withdraw funds from their pension accounts before retirement. However, retirees will be permitted to withdraw up to 25% of the accumulated funds at the time of retirement.
The Ministry of Finance also announced that a Non-Banking Financial Company (NBFC) will be established to manage the pension fund, in line with recommendations from international financial institutions such as the World Bank.
