Business Desk 
Oct 05, 2025
The Prime Minister Shehbaz Sharif-led government introduced a new “Contributory Pension Fund Scheme” on Friday, with employees contributing 10% of their salaries toward their pensions, entitling them to a 12% contribution from the national exchequer.
The Ministry of Finance issued the “Federal Government Defined Contribution (FGDC) Pension Fund Scheme Rules 2024” under the Public Finance Management Act 2019, which regulates the scheme according to the Voluntary Pension System Rules 2005 and Non-Banking Finance Companies and Notified Entities Regulations 2008.
The federal government has allocated Rs10 billion in the 2024-25 budget and Rs4.3 billion for 2025-26 to support the new system.
It is worth noting that the new pension system will not apply to current government employees but will come into effect for employees recruited after July 1, 2024.
For military personnel, the new pension scheme is expected to be enforced from July 1, 2025.
To ensure employees' post-retirement benefits, it has been made an important element of the scheme that the employees will not be able to withdraw funds from their pension accounts before retirement.
However, retirees will be permitted to withdraw up to 25% of the accumulated funds at the time of retirement, while the remaining amount will be invested for at least 20 years or until age 80, in accordance with the Voluntary Pension System Rules 2002.
The Ministry of Finance announced that a Non-Banking Financial Company (NBFC) will be established to manage the pension fund, in line with recommendations from international financial institutions such as the World Bank.
In cases of resignation, termination, dismissal or voluntary retirement, employee entitlement from the pension accounts will be determined by government rules issued from time to time.
