ISLAMABAD: The government has notified the introduction of a contributory fund scheme for new entrants to the civil government and armed forces of Pakistan.

The finance ministry said the federal government employees would contribute 10 per cent of their basic pay while the government would contribute 20pc.

It said the government had decided that in future the contributory pension fund scheme shall be introduced for all the civil employees of the federal government, including the civilian paid from the defence estimates who were appointed on a regular basis or after July 1, 2024.

“This scheme shall also be applicable to the armed forces who are appointed on a regular basis on or after July 1, 2025,” the notification added. The government has allocated Rs10bn for the pension fund in the budget for 2024-25.

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The new scheme is not applicable to the existing employees. The government believes the contribution pension fund would slow down the growth in pension liabilities in future.

The federal government’s total expenditure for pensions has been estimated at Rs1.014 trillion for the current fiscal year, up from Rs821bn in FY24. This included pension liabilities of the armed forces at Rs662bn for the current fiscal year, up from Rs563bn, showing an increase of about 18pc.

The pension expenditure of civilians on the other hand has been budgeted at Rs220bn for the current year against Rs228bn last year, a reduction of 3.5pc. One of the major reasons for hike in the pension budget was Rs122bn allocation for the 15pc increase in pensions with effect from July 1, 2024.

Published in Dawn, September 4th, 2024