The Pakistani government is set to roll out a new voluntary pension scheme, effective from July 1, in response to a crucial condition set by the International Monetary Fund (IMF). The move aims to address the challenge of hefty government pensions and modernize the pension system.
Voluntary Pension Scheme
Sources within the government disclosed that the voluntary pension scheme is part of a broader strategy to manage government pensions more efficiently and streamline the existing system. New recruits in the government sector will be enrolled under the voluntary pension scheme, departing from the traditional government pension structure.
The Securities and Exchange Commission of Pakistan (SECP) has developed a comprehensive strategy for new government hires, marking a significant shift in pension management. “New government employees will get voluntary pension instead of the government scheme. If the existing employees also agree, they can be transferred to the new scheme,” stated government sources.
Unlike the current Provident Fund or gratuity facilities prevalent in the private sector, the new pension scheme is designed to provide a consistent and stable income to government employees post-retirement. The SECP recommends the adoption of the pension scheme in both public and private sectors to ensure financial security for employees during their retirement years.
Additionally, the scheme offers the advantage of maintaining pension benefits even in the event of a job change, ensuring continuous financial support post-retirement. While the SECP proposes the implementation of the pension scheme in both sectors, it suggests the private sector exclusively adopt the voluntary pension scheme.
Presently, the country is witnessing the establishment of 43 pension funds, with approximately Rs61 billion invested. The Khyber Pakhtunkhwa government initiated investments in pension funds two years ago, with 21 funds dedicated to its employees. Following this trend, the Punjab government is also expected to introduce a voluntary pension scheme for its employees.
The introduction of the voluntary pension scheme aligns with the government’s commitment to addressing IMF concerns related to inflated pension costs. By implementing this scheme, the government aims to ensure fiscal sustainability and long-term financial stability in the country.
Passport fee increased in Pakistan, taking effect from March 7
