The Government of Pakistan has introduced a Contributory Pension scheme for federal employees. This is a co-investment plan in which both the government and employees contribute. Under the scheme, the government will contribute 12% while employees will contribute 10% of their salaries towards the pension fund. At the time of retirement, employees can withdraw 25% of their pension as a lump sum, while the remaining amount will be disbursed as monthly pension.
Contributory Pension Scheme in Pakistan 2025
Some sources revel that IMF is imposing such schemes in Pakistan with the help of World Bank. Already we have mentioned here Contributory Pension Scheme in Pakistan 2025 so employees can understand it easily.
New Pension Scheme in Pakistan 2025 Federal Government
The contributory pension framework has not yet been applied to the armed forces, as both employer and employee contributions are currently set at zero. Officials explained that the reform is designed to strengthen the sustainability of Pakistan’s pension system, ease fiscal pressures, and bring it in line with international best practices. Contributions from employees and the government will be pooled into a dedicated fund, and the returns on this fund will determine pension benefits.
Federal Govt New Pension Model 2025 for Employees
According to the Ministry of Finance, the government has allocated Rs. 10 billion for the new pension fund. The fund will be managed under modern financial systems in collaboration with international institutions such as the World Bank.
New Pension Scheme Rules 2025
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Employees cannot withdraw pension funds before retirement.
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At retirement, they may withdraw up to 25% of their accumulated savings.
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The remaining balance will stay invested under the Voluntary Pension System Rules, 2002.
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Funds will remain invested until either:
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20 years of investment are completed, or
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The employee reaches the age of 80, whichever comes first.
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Which employees will fall under the new pension scheme?
The new pension scheme will apply to all federal employees recruited after July 1, 2024, and to military personnel recruited after July 1, 2025. However, it is important to note that current employees will continue under the existing pension system and will not be affected by these changes.
Key features of New Pension Scheme in Pakistan 2025
- Applies to federal employees recruited after July 1, 2024, and military personnel after July 1, 2025.
- Based on a contributory system: Government contributes 12%, employees contribute 10% of salary.
- A dedicated pension fund will be created, managed under modern financial systems.
- Employees can withdraw up to 25% of their savings at retirement.
- Remaining funds stay invested under the Voluntary Pension System Rules, 2002.
- Withdrawals allowed after completing 20 years of investment or reaching 80 years of age, whichever comes first.
- Current employees remain under the old pension system and are not affected.
- Aims to ensure sustainability, reduce fiscal burden, and align with international best practices.
