What is new pension fund?
The Economic Coordination Committee (ECC) of the federal cabinet has greenlit the creation of a pension fund for retired employees, as reported by The Asian Mirror.
Presided over by Finance Minister Muhammad Aurangzeb, the ECC meeting also gave the nod to a Defined Contributory Scheme for new employees.
This scheme is slated to commence on July 1, 2024, for civilian workers, and on July 1, 2025, for military personnel.
Moreover, the ECC approved the Ministry of Information Technology & Telecommunication’s proposal to return Rs. 11.13 billion to the Universal Service Fund (USF) to mitigate the budget shortfall.
Also read: IMF asks Pakistan to ‘impose’ tax on monthly pensions
The committee allocated Rs. 4,228.429 million to the Federal Board of Revenue (FBR) to clear the liabilities of its foreign-funded projects.
In response to a request from the Ministry of Railways, the ECC sanctioned an additional Rs. 2 billion to settle outstanding liabilities.
An amount of Rs. 7.987 billion was also approved for the Planning Commission to address liabilities related to the 7th Population & Housing Census.
Furthermore, the ECC endorsed a summary from the Finance Division to introduce the “Risk Coverage Scheme for SMEs,” with a directive for quarterly monitoring and evaluation of the scheme.
Annual pension fund in 2022-23 in Pakistan was around Rs 530 billion ($2 billion).
The annual state pension in the UK between 2022-23 was $137 billion.— Zulfiqar Ahmed 🤔 (@ZulfiqarAhmed69) April 12, 2023
Many key officials participated in the meeting including the Minister for Industries & Production Rana Tanveer Hussain, Minister for Petroleum Musadik Masood Malik, Minister for Power Sardar Awais Ahmad Khan Leghari, Minister for Planning Development & Special Initiatives Ahsan Iqbal, Minister of State for Finance & Revenue Ali Pervez Malik, the Governor of the State Bank of Pakistan (SBP), the Deputy Chairman of the Planning Commission, and several senior officers from relevant ministries.
What is new pension fund
Earlier, in a move aimed at easing the strain on the national budget, the federal government proposed 13 amendments to the pension scheme as part of the 2024 budget.
The proposed changes to the Government Employees Pension Scheme stipulate that workers will receive a gross pension amounting to 70 percent of their salary from two years prior to retirement.
Additionally, the amendments introduce provisions for voluntary retirement after 25 years of service, offering employees the option to retire earlier than previously permitted.
This option includes a graduated scale of annual pension deductions, ranging from 3 percent to 20 percent, until the retiree reaches the age of 60.
