The government has officially launched a Contributory Pension Fund Scheme for newly recruited government employees, as announced in a notification from the Finance Ministry. Starting July 1, 2024, this new scheme will transform the pension framework for civil servants, aiming to address the increasing financial strain on the federal budget due to pensions.
The Contributory Pension Fund Scheme will apply to all new civil servants from July 1, 2024. For civilian employees whose salaries are funded by the defense budget, the scheme will be implemented a year later, on July 1, 2025. Under the scheme, new employees will be required to contribute 10% of their basic salary to the pension fund, while the federal government will contribute 20% to the same fund.
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This initiative follows the Economic Coordination Committee’s (ECC) approval of pension structure amendments, based on recommendations from the Pay and Pension Commission. The ECC’s recommendations include implementing the new pension rules for new employees starting July 1, with additional reforms planned for existing pensioners.
Federal Finance Minister Muhammad Aurangzeb recently noted that the existing pension system places a significant burden on the national budget. He stressed the need for adjustments to the service structure to manage and gradually reduce pension-related expenditures.
