Pakistan Introduces New Pension Scheme

Islamabad, October 2025 – The Government of Pakistan has officially introduced the New Pension Scheme 2025 aimed at federal employees and armed forces personnel recruited after mid-2024 and 2025, respectively. This contributory scheme replaces the previous unsustainable model and seeks to reduce long-term fiscal stress on the national budget while offering a transparent and secure retirement plan. Backed by technical guidance from international institutions including the World Bank, the pension reform is seen as a necessary step to ensure financial discipline, long-term employee welfare, and modern fund management practices across the public sector.

Key Features of New Pension Scheme for Government Employees

Feature	Details
Start Date	July 1, 2024 (civil), July 1, 2025 (military)
Eligibility	All federal and armed forces employees recruited after these dates
Employee Contribution	10% of monthly basic salary
Government Contribution	12% of employee’s monthly salary
Withdrawal Limit at Retirement	Up to 25% lump sum, rest in monthly pension
Early Withdrawal	Not allowed before retirement
Pension Fund Management	Through a government-backed NBFC
Oversight & Accountability	Audited regularly; aligned with international standards

The contribution model and fund structure in the pension scheme were explained.

Under the new model, the pension fund will be built by combined monthly contributions:

• Employees contribute 10% of their basic monthly salary
• Government contributes an additional 12%
• Total of 22% of the salary is deposited monthly into a professionally managed pension fund

The scheme focuses on long-term savings, ensuring sustainable and protected income post-retirement. The NBFC managing the fund will operate under strict regulatory compliance and transparent investment practices.

Eligibility and Coverage Timeline

Who Will Be Covered Under the Scheme?

• Federal civil employees recruited after July 1, 2024
• Armed forces personnel recruited after July 1, 2025
• Existing employees remain under the old pension system

This clear separation ensures that the reform is forward-looking without disrupting current beneficiaries.

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Fund Access and Retirement Benefits

• No withdrawals allowed during employment
• At retirement, employees can withdraw 25% of the fund as a lump sum
• Remaining balance converted into a monthly pension payment

This system discourages early depletion of retirement savings while offering flexibility at the point of retirement.

Pension Management and Oversight Reforms

The fund will be handled by a newly established Non-Banking Financial Company (NBFC) under strict financial regulations. This NBFC will:

• Invest funds based on global best practices
• Maintain independent audits
• Ensure transparent reporting to the public and government

These reforms aim to build trust in the pension process and minimize fiscal mismanagement.

Why the Pension Scheme Matters for Pakistan

• Addresses Rs. 1.055 trillion pension liabilities as of 2024
• Reduces the government’s future pension burden significantly
• Aligns with global pension reform standards

 Conclusion

The Pakistan New Pension Scheme 2025 represents a foundational change in the country’s retirement system. It balances government liability with employee financial security, promotes disciplined savings, and is managed through modern financial systems. With strong backing from global institutions and a clear focus on sustainability, this scheme aims to secure the future of Pakistan’s public workforce without compromising the national budget.

For more official updates, visit the Ministry of Finance Website official site.

FAQs

 Who is eligible for the New Pension Scheme 2025?
A: All new federal government and armed forces employees recruited after July 1, 2024, and July 1, 2025, respectively.

 Can I withdraw funds before retirement?
A: No, withdrawals are not allowed before retirement to protect long-term savings.

 How much can be withdrawn at retirement?
A: Up to 25% of the accumulated pension fund can be withdrawn as a lump sum; the rest will be paid monthly.