Pakistan

KP govt introduces new pension scheme; Here’s all you need to know

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Web Desk

2 years ago

PESHAWAR: The government of Khyber Pakhtunkhwa (KP) has introduced a new pension scheme after amending the Civil Servant Act 1973 to reform the pension system, which includes retirement as a lump sum instead of monthly payments, here on Wednesday.

As per the details, a separate bank account will be set up to manage these funds, ensuring that the treasury is not burdened when disbursements are made.

This new pension system is called “Contributory Pension System”, where employees will be deducted from their salaries based on their pay scale, and the provincial government will also contribute equally.

The system of monthly pension has been abolished under this new scheme, for which a formal notification has also been issued.

The new pension system is applicable to all employees recruited after June 2022, but is yet to be implemented for the civil bureaucracy.

The KP Finance Department has said that the new employees will get their pension as lump sum payment on completion of their service.

The pension fund will include a monthly contribution from the employees’ basic salaries, matched by a matching contribution from the government. The funds in the pension account will accumulate interest, which will then be paid to the employees, ensuring that there is no burden on the exchequer.

According to the Finance Department, the federal government is also considering adopting a similar pension system, which will establish a uniform pension system across the country.

Sources in the finance department say that when the monthly pension system is being scrapped, the lump sum payment after retirement will be more important.

Additionally, the new system will provide interest-free loan facilities to employees so that they can start projects like building a house before retirement.

The program has now been expanded to include new officers joining the provincial bureaucracy, making Khyber Pakhtunkhwa the first province to scrap the traditional pension system for civil servants.

Web Desk