ISLAMABAD: The Ministry of Finance has enforced the new contributory pension fund scheme and issued a formal notification for its implementation.
Federal employees will contribute 10 percent of their salary for pension, the government will contribute 12 percent, according to the Ministry of Finance, and 22 percent will be deposited in the pension fund under the new system.
The new pension system will apply to recruited employees from July 1, 2024.
According to the notification, the new system will not apply to existing government employees; it has been implemented for armed forces personnel since July 1, 2025.
The government has allocated Rs 10 billion for the new pension fund. Pension liabilities have increased to Rs 10 trillion 55 billion. The pension expenditure of the armed forces will reach Rs 742 billion in 2025-26.
According to the Ministry of Finance, employees will not be able to withdraw money from their pension accounts before retirement, but they will be allowed to withdraw 25% of the amount upon retirement.
According to the notification, the Ministry of Finance will establish a non-banking finance company for the pension fund. This system has been introduced on the advice of international financial institutions, including the World Bank.
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