The Finance Ministry has launched a Contributory Pension Fund Scheme for newly recruited government employees. This initiative, effective from July 1, 2024, introduces a major reform in the pension system for civil servants, aiming to alleviate the financial strain on the federal budget.
The scheme will apply to all new civil servants starting July 1, 2024, and extend to civilian employees paid from the defense budget starting July 1, 2025.
Under this arrangement, new employees will contribute 10% of their basic salary to the pension fund, while the federal government will add a 20% contribution.
This reform follows the Economic Coordination Committee’s (ECC) decision, which endorsed changes based on the Pay and Pension Commission’s recommendations. These amendments aim to streamline the pension process for recruits and introduce new regulations for current pensioners.
During a recent press conference, Federal Finance Minister Muhammad Aurangzeb stressed the existing pension system’s significant impact on the national budget. He underlined the importance of restructuring service terms to manage and reduce pension-related costs sustainably.
