The government has introduced a new pension scheme ‘Contributory Pension Fund Scheme’ to reduce the increasing burden of pension on the exchequer which will be applicable from the beginning of the current financial year i.e. 1st July 2024. This new pension scheme launched by the government has been launched at a time when Pakistan’s pension budget has crossed one thousand billion rupees.
Important points related to the scheme:
OBJECTIVE OF THE SCHEME: The federal government of Pakistan has introduced a new pension scheme to reduce the pension burden on the public exchequer.
Scheme Name: ‘Contributory Pension Fund Scheme’ will start from 1st July 2024.
Eligible persons: This scheme will be applicable to the employees recruited after July 1, 2024 in the Federal Government Institutions. The scheme will come into effect on July 1, 2025 for military employees. In case of death or ineligibility of the spouse, the remaining eligible family members’ pension period has been limited to 10 years. Family members will get pension up to 25 years, eligible children will get general family pension up to 10 years or until the child reaches 21 years of age, if the child of the deceased pensioner is disabled, he will get pension for life. Apart from this, the rate of pension has been increased by 50% for all ranks of armed forces and civil armed forces. This pension will be transferable to eligible heirs.
Contribution to the Fund: Employees will contribute 10 percent of their basic salary and the federal government will contribute 20 percent to the pension fund.
Dedicated finance: The government has allocated Rs 10 billion for this pension fund in the current financial year.
Investment opportunity: The accumulated money will be used to invest in stock market, insurance, government securities etc. to earn profit.
Former employees: Current and ex-employees will be exempted from this scheme, i.e. these new rules will not apply to them.
Penalty on premature retirement: Employees taking voluntary retirement will incur a penalty if an employee takes voluntary retirement after twenty-five years of service, the pension will be deducted at the rate of three percent with effect from the date of retirement.
Employment agencies: Employees of autonomous bodies run by the government do not get pension from the federal government. These institutions include the National Highway Authority, Agricultural Development Bank, NADRA, Karachi Port Trust, various railway institutions, Pakistan Telecommunication Authority, OGRA and many other institutions whose employees’ pensions are not paid from the federal government budget.
According to Shehbaz Rana, a journalist of economic affairs, “In the short term, it does not benefit the government, nor will it have a positive impact on the budget, but in the long term, the new scheme will make a difference and the expenditure on pensions will be reduced.” .’
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2024-09-15 10:54:10
– What are the key features of the Contributory Pension Fund Scheme introduced by Pakistan?
Table of Contents
Pakistan Introduces Contributory Pension Fund Scheme to Reduce Burden on Exchequer
The government of Pakistan has recently introduced a new pension scheme, known as the Contributory Pension Fund Scheme, aiming to reduce the increasing burden of pension on the exchequer. This new scheme, which comes into effect from July 1, 2024, is a significant step towards addressing the country’s pension budget, which has crossed a staggering one thousand billion rupees.
Objective of the Scheme
The primary objective of the Contributory Pension Fund Scheme is to reduce the pension burden on the public exchequer. The scheme is designed to shift the responsibility of pension funding from the government to the employees themselves, making it a contributory scheme.
Key Features of the Scheme
The scheme has several key features that are worth noting:
Scheme Name: The Contributory Pension Fund Scheme will start from July 1, 2024, and will apply to employees recruited after this date in Federal Government Institutions.
Eligible Persons: The scheme will be applicable to employees recruited after July 1, 2024, in Federal Government Institutions. Military employees will be eligible to join the scheme from July 1, 2025.
Contribution to the Fund: Employees will contribute 10% of their basic salary to the pension fund, while the federal government will contribute 20%. This will ensure a shared responsibility between the government and employees.
Dedicated Finance: The government has allocated Rs 10 billion for this pension fund in the current financial year, demonstrating its commitment to the scheme’s success.
Investment Opportunity: The accumulated money will be invested in various assets, such as stock markets, insurance, and government securities, to earn profits and maximize returns.
Former Employees: Current and ex-employees will be exempted from this scheme, meaning that the new rules will not apply to them.
Penalty on Premature Retirement: Employees taking voluntary retirement will incur a penalty. If an employee takes voluntary retirement after 25 years of service, their pension will be deducted at a rate of 3% from the date of retirement.
Employment Agencies: Employees of autonomous bodies run by the government do not get pension from the federal government. These institutions include the National Highway Authority, Pakistan Railways, and other similar organizations.
Benefits of the Scheme
The Contributory Pension Fund Scheme offers several benefits to employees, including:
Increased Pension: The rate of pension has been increased by 50% for all ranks of armed forces and civil armed forces.
Transferable Pension: The pension will be transferable to eligible heirs.
Family Benefits: Family members will receive pension up to 25 years, while eligible children will receive general family pension up to 10 years or until the child reaches 21 years of age. In case of a disabled child, they will receive pension for life.
Impact on Pakistan’s Economy
The Contributory Pension Fund Scheme is expected to have a positive impact on Pakistan’s economy by reducing the burden on the exchequer. This will enable the government to allocate more resources to other critical areas, such as education, healthcare, and infrastructure development.
Conclusion
The Contributory Pension Fund Scheme is a significant step towards reforming Pakistan’s pension system and reducing the burden on the exchequer. By introducing a contributory scheme, the government is shifting the responsibility of pension funding to employees, while also providing them with a more sustainable and secure retirement option. As the scheme comes into effect, it is essential for employees to understand its features and benefits, and to plan accordingly for their retirement.
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What is the Contributory Pension Fund Scheme introduced by the government of Pakistan?
Pakistan Introduces Contributory Pension Fund Scheme to Reduce Burden on Exchequer
The government of Pakistan has recently introduced a new pension scheme, known as the Contributory Pension Fund Scheme, aiming to reduce the increasing burden of pension on the exchequer. This new scheme, which comes into effect from July 1, 2024, is a significant step towards addressing the country’s pension budget, which has crossed a staggering one thousand billion rupees.
Objective of the Scheme
The primary objective of the Contributory Pension Fund Scheme is to reduce the pension burden on the public exchequer. The scheme is designed to shift the responsibility of pension funding from the government to the employees themselves, making it a contributory pension scheme.
Key Features of the Scheme
The Contributory Pension Fund Scheme has several key features that are worth noting:
- Eligible Persons: The scheme will be applicable to employees recruited after July 1, 2024, in federal government institutions. The scheme will come into effect on July 1, 2025, for military employees.
- Contribution to the Fund: Employees will contribute 10% of their basic salary, while the federal government will contribute 20% to the pension fund.
- Dedicated Finance: The government has allocated Rs 10 billion for this pension fund in the current financial year.
- Investment Opportunity: The accumulated money will be used to invest in the stock market, insurance, government securities, etc. to earn a profit.
- Former Employees: Current and ex-employees will be exempted from this scheme, i.e., these new rules will not apply to them.
- Penalty on Premature Retirement: Employees taking voluntary retirement will incur a penalty. If an employee takes voluntary retirement after 25 years of service, the pension will be deducted at the rate of 3% with effect from the date of retirement.
- Employment Agencies: Employees of autonomous bodies run by the government do not get pension from the federal government. These institutions include the National Highway Authority, Agricultural Development Bank, NADRA, Karachi Port Trust, various railway institutions, Pakistan Telecommunication Authority, OGRA, and many other institutions whose employees’ pensions are not paid from the federal government budget.
Benefits of the Scheme
The Contributory Pension Fund Scheme is expected to have several benefits, including:
- Reduced Burden on Exchequer: The scheme will help reduce the increasing burden of pension on the public exchequer, which has been a significant concern for the government.
- Increased Investment: The accumulated money will be invested in various assets, generating a profit and increasing the pension fund.
- Improved Pension Security: The scheme will provide a sense of security to employees, who will have a guaranteed pension fund after retirement.
- Encouraging Savings: The scheme will encourage employees to save for their retirement, promoting a culture of thriftiness and financial planning.
Expert Opinion
According to Shehbaz Rana, a journalist of economic affairs, “In the short term, it does not benefit the government, nor will it have a positive impact on the budget, but in the long term, the new scheme will make a difference and the expenditure on pensions will be reduced.”
the Contributory Pension Fund Scheme is a significant step towards addressing the increasing burden of pension on the exchequer. The scheme is expected to provide a sense of security to employees, promote savings, and reduce the financial burden on the government.
