What is Pakistan’s new voluntary pension scheme for government employees? The Pakistan government is gearing up to implement a Voluntary Pension Scheme starting from the upcoming fiscal year, aiming to streamline the cumbersome and antiquated government pension system.
This move comes as a response to pressure from the International Monetary Fund (IMF), signaling a departure from the existing conventional pension framework.
What is Pakistan’s new voluntary pension scheme?
Under the proposed scheme, newly hired government personnel will have the option to enroll in a voluntary pension program commencing July 1.
However, those already in government service will continue to receive pensions funded through the official budget.
Any transition of existing employees to the new pension scheme will be contingent upon their consent.
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Concurrently, the Securities and Exchange Commission of Pakistan (SECP) has formulated a comprehensive strategy tailored for new recruits, with recommendations for its adoption within the private sector.
The voluntary pension scheme aims to provide a reliable income stream for all government employees upon retirement, in contrast to the Provident Fund or gratuity offerings prevalent in the private sector. Ensuring financial security stands as a primary objective of this reform effort.
As of early 2024, the country has seen the establishment of 43 pension funds, serving a population of 240 million, with investments in these funds totaling 61 billion rupees.
The Khyber Pakhtunkhwa (KP) government took the initiative to invest in pension funds two years ago, with 21 funds catering to its employees.
The Punjab government is poised to follow suit by introducing a voluntary pension scheme for its employees.
