The government has officially introduced a Contributory Pension Fund Scheme for newly recruited government employees, according to a notification issued by the Finance Ministry.
This new scheme, set to take effect from July 1, 2024, marks a significant shift in the pension structure for civil servants and is aimed at managing the growing financial burden of pensions on the federal budget.
The Contributory Pension Fund Scheme will be applicable to all new civil servants from July 1, 2024. For civilian employees whose salaries are drawn from the defense budget, the scheme will come into effect a year later, on July 1, 2025.
Under the new scheme, newly recruited employees will contribute 10% of their basic salary to the pension fund. In contrast, the federal government will contribute 20% to the same fund.
The introduction of the Contributory Pension Fund Scheme follows the approval of amendments in the pension structure by the Economic Coordination Committee (ECC), based on recommendations from the Pay and Pension Commission.
The ECC recommended the amendments to the pension scheme be implemented from July 1 for new employees, while new rules will also be introduced for the existing pensioners.
Federal Finance Minister Muhammad Aurangzeb had highlighted in a recent press conference that the current pension system posed a considerable burden on the national budget. He emphasized that over time, it is essential to modify the service structure to manage and gradually reduce pension-related expenditures.
