Islamabad:
The Federal Government has officially implemented the Tax Pension Plan for Public Servants, marking an important reform in the pension system.
According to the new rules of the contributing pension funds scheme, federal employees will now contribute to 10%of their salary towards their pension fund to qualify for a government contribution of 12%, which makes the total contribution 22%.
This scheme replaces the old pension system for newly recruited employees and the Regulation Department of the Ministry of Finance has issued the rules of the Federal Government Pension Fund (FGDC) of the defined contribution (FGDC) (FGDC)
2024, formulated under the 2019 Public Finance Management Law.
The scheme will be regulated under the rules of the 2005 voluntary pension system and non -banking financial companies and the regulations of notified entities 2008, replacing the August 2024 rules that had established the government’s contribution by 20%.
The new rules apply to civilian employees recruited as of July 1, 2024, including those of Civil Defense. The rules for the personnel of the Armed Forces will enter into force as of July 1, 2025, but are still pending implementation.
The Government assigned RS10 billion for fiscal year 2024-25 and RS4.3 billion for fiscal year 2025-26 to support the system, which has been introduced into the recommendations of the International Monetary Fund (IMF) and the World Bank to reduce the growing fiscal burden of pensions.
Current employees will not be affected. However, the reform aims to delay the increase in pension spending, estimated at RS1.05 billion by 2024-25, 29% more than last year.
According to the new rules, authorized pension fund managers will administer the fund. The general accountant of the Pakistan office will handle deposits, maintenance of records and transfers.
Employees cannot withdraw funds before retirement; When they retire, they can withdraw up to 25%, with the rest invested for 20 years or up to 80 years.
The Ministry of Finance will hire pension fund managers that support electronic transfer systems and guarantee insurance coverage in case of death or disability. A non -banking financial company (NBFC) will supervise the implementation and monitoring of the system.
This marks an important change of the defined benefit model to a defined contribution system, aimed at financial sustainability and better retirement security for future government employees.
