Govt Rolls Out Contribution Based Pension Scheme
Key Takeaways
- The federal government adopted the Defined Contribution Pension Fund Scheme Rules, 2024, moving away from the non-contributory pension model.
- Civilian federal employees will now contribute 10% of their pensionable pay, matched by a 12% employer contribution.
- The reform aims to lessen fiscal strain and improve the long-term sustainability of the pension system, aligning with IMF commitments.
- Pension liabilities in Pakistan have recently crossed Rs. 1 trillion, putting significant pressure on the national budget.
- The new scheme requires contributions to be pooled and investment returns to determine eventual pension payouts, but it has not yet been implemented for the armed forces.
The federal government of Pakistan has officially adopted the Federal Government Defined Contribution Pension Fund Scheme Rules, 2024 (SRO 1728(I)/2025), marking a major shift from the previous non-contributory pension model to a contributory framework for federal employees. Under the new rules, civilian staff will see the employer contribute 12% and the employee 10% of pensionable pay, with contributions pooled and invested to determine final pension amounts. This consequential reform aims to alleviate mounting fiscal strain caused by ballooning pension liabilities, which exceeded Rs. 1 trillion in FY25. The implementation is part of Pakistanās commitment under its IMF program to achieve greater fiscal sustainability. While the notification has been sent to numerous key financial and administrative bodies for immediate alignment, the scheme has not yet been extended to the armed forces.
