ISLAMABAD – Pakistani government launched a new contributory pension fund scheme aimed at cutting rising burden of pension expenditures on the national exchequer.
According to a notification issued by the Ministry of Finance, the new system will require federal employees recruited after July 1, 2024, to contribute 10% of their salaries towards the pension fund, while the government will contribute 12%. This makes a total of 22% being deposited into the fund.
The government allocated Rs10 billion to establish a new fund. Officials said pension liabilities are projected to reach Rs.10.55 trillion in fiscal year 2024–25, with armed forces’ pension expenditures expected to climb to Rs 742 billion in 2025–26.
Under the scheme, employees will not be allowed to withdraw from their pension accounts before retirement. However, at the time of retirement, they will be permitted to withdraw up to 25% of their accumulated savings.
The scheme will not apply to existing government employees. For members of the armed forces, implementation is expected to begin from July 1, 2025.
Ministry of Finance further announced that non-banking finance company will be established to manage the pension fund. The scheme has been designed with input from international financial institutions, particularly the World Bank.
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