ISLAMABAD: The federal government has notified the Federal Government Defined Contribution Pension Fund Scheme Rules, 2024, marking a major shift in the pension framework to a contributory model.
According to an Office Memorandum issued by the Ministry of Finance, the statutory notification SRO 1728(I)/2025 dated August 27, 2025, has been circulated to all key federal ministries, divisions, and institutions for implementation.
The scheme, once operational, will govern future pension entitlements of federal government employees under a contributory structure rather than the traditional non-contributory system.
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The monthly contribution rate for the employer’s contribution for federal government employees, including civilians, will be 12 percent of pensionable pay, and 10 percent for the employee’s contribution. For the armed forces, the process is yet to be started, and for both employers and employees remains zero so far.
Officials said the reform is aimed at improving the sustainability of the pension system, reducing fiscal pressures, and aligning Pakistan with international best practices. Under the new scheme, contributions from both employees and the government will be invested in a dedicated fund, with returns determining the eventual pension benefits.
The move is considered one of the most significant structural reforms in Pakistan’s public financial management in recent years, as pension liabilities have been growing at an unsustainable pace.
The notification has been shared with the Auditor General of Pakistan, the Accountant General Pakistan Revenues (AGPR), the State Bank of Pakistan, as well as all major ministries, including Defence, Education, Railways, Energy, IT, Climate Change, and others, for immediate compliance.
Copyright Business Recorder, 2025
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