Details On New Voluntary Pension Plan In Pakistan

In an effort to simplify the complex and outdated government pension system, Pakistan’s new government plans to launch a Voluntary Pension Scheme at the commencement of the next Fiscal Year. This initiative is a response to the demands of the International Monetary Fund (IMF) to reform the existing traditional pension setup.

Starting from July 1, newly hired government employees will benefit from the voluntary pension scheme, while those who joined in previous years will continue to receive pensions from the official budget. The transition of employees to the new pension scheme will be contingent upon their consent.

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Simultaneously, the Securities and Exchange Commission of Pakistan (SECP) has developed a comprehensive strategy for new recruits and has recommended its implementation in the private sector as well. Under this scheme, employees will receive voluntary pensions instead of the government pension scheme. Existing employees may also be transferred to the new scheme with their consent.

The primary goal is to ensure a stable income for all government employees upon retirement, a departure from the Provident Fund or gratuity facilities prevalent in the private sector. The focus is on enhancing financial security for retirees.

As of early 2024, 43 pension funds are in the process of establishment across the country, with total investments in these funds reaching 61 billion rupees. The Khyber Pakhtunkhwa (KP) government initiated investments in pension funds two years ago, with 21 funds serving its employees. The Punjab government is expected to follow suit by introducing a voluntary pension scheme for its employees.