The federal government has launched a new Contributory Pension Scheme for public servants recruited after July 1, 2024. Employees will contribute 10% of their salary, and the government will add 12%, making a total of 22%. This replaces the old pension system for new employees.
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The scheme is regulated under the Federal Government Defined Contribution Pension Fund Scheme Rules 2024 and existing Voluntary Pension System rules. Rules for armed forces personnel will start from July 1, 2025.
The government has allocated Rs10 billion for 2024-25 and Rs4.3 billion for 2025-26 to support the system. The reform aims to reduce pension costs, which are estimated at Rs1.05 trillion this year, following IMF and World Bank recommendations.
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Authorized pension fund managers will handle investments, while the Accountant General’s office manages deposits and records. Employees cannot withdraw funds before retirement, and after retirement, only 25% can be withdrawn while the rest remains invested until age 80.
