Government Unveils New Contributory Pension Fund Scheme for Civil Servants
"Finance Ministry Introduces Contributory Pension Fund: Significant Changes for New Government Employees"
The Finance Ministry has officially announced a new Contributory Pension Fund Scheme for newly hired government employees, set to be implemented starting July 1, 2024.
This initiative represents a major overhaul in the pension system for civil servants and is designed to alleviate the increasing financial strain pensions place on the federal budget.
The Contributory Pension Fund Scheme will apply to all new civil servants from July 1, 2024. For civilian employees funded by the defense budget, the scheme will take effect a year later, on July 1, 2025.
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Under the new plan, newly recruited employees will be required to contribute 10% of their basic salary to the pension fund, while the federal government will contribute 20%.
The scheme follows the Economic Coordination Committee (ECC) approving amendments to the pension system, based on recommendations from the Pay and Pension Commission.
The ECC proposed these changes to begin from July 1 for new employees, with additional reforms for current pensioners also planned.
Federal Finance Minister Muhammad Aurangzeb recently noted that the existing pension system imposes a significant burden on the national budget. He emphasized the need to adjust the service structure over time to manage and gradually reduce pension-related costs.
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