Pakistan Introduces New Pension Scheme 2025 – Key Features, Rules & Benefits for Government Employees

Islamabad (October 2025): The federal government of Pakistan has announced a new contributory pension scheme for government employees and the armed forces. This scheme aims to tackle the rising pension burden on the national budget while ensuring long-term financial security for new employees.

According to the Ministry of Finance, the government has already set aside Rs. 10 billion for the new pension fund, which will operate under modern financial management systems in collaboration with international institutions like the World Bank.

Why a New Pension Scheme Was Needed

Pension liabilities in Pakistan have reached alarming levels:

• Total obligations (2024): Rs. 1.055 trillion

• Armed forces pensions (2025 projection): Rs. 742 billion

The previous pension system was unsustainable, prompting the government to introduce a shared contributory model.

Contribution Structure – How It Works

The pension scheme is based on employee + government contributions:

• Employees: Contribute 10% of their monthly salary

• Government: Adds an extra 12% contribution

• Total Contribution: 22% goes directly into the pension fund

This ensures employees gradually build a sustainable retirement fund while reducing the government’s financial burden.

Who Will Be Covered Under the New Pension Scheme?

• New federal employees recruited after July 1, 2024

• Military personnel recruited after July 1, 2025

📌 Important: Current employees will remain under the old pension system and will not be affected by the changes.

Also Read: Apni Zameen Apna Ghar Program 2025 – Offline Registration Now Open via AC Office

Withdrawal Rules & Retirement Benefits

• Employees cannot withdraw pension funds before retirement

• At retirement, employees may withdraw up to 25% of their accumulated funds as a lump sum

• Remaining funds will be disbursed as monthly pension payments

This model ensures financial security for retirees while preventing premature withdrawals.

Pension Fund Management

To ensure transparency and efficiency, the government will establish a Non-Banking Financial Company (NBFC) to manage the pension fund.

The NBFC will:

• Professionally manage pension investments

• Follow international best practices

• Ensure accountability and regular audits

Key Highlights of the Pension Scheme 2025

✔️ Employee contribution: 10%
✔️ Government contribution: 12%
✔️ Withdrawal limit: 25% at retirement
✔️ Applicable for new employees only
✔️ NBFC to manage funds professionally
✔️ Backed by World Bank recommendations

Why This Matters

The new pension scheme is a major reform aimed at:

• Reducing the long-term financial burden on the national budget

• Providing sustainable retirement savings for new employees

• Ensuring a modern, transparent, and accountable system

• Aligning Pakistan’s pension system with global best practices

Conclusion

The launch of the Pakistan New Pension Scheme 2025 marks a significant policy shift toward sustainable financial planning. By making it contributory, the government ensures that pensions remain secure while controlling rising costs.

📌 If you are joining the federal government after July 1, 2024, or the armed forces after July 1, 2025, this new scheme will apply to you.