The federal government is set to introduce the Voluntary Pension Scheme starting from July 1st, replacing the existing traditional pension setup. This move comes in response to demands from the International Monetary Fund (IMF), according to reports.
Under this scheme, all newly recruited government employees will be enrolled in the voluntary pension scheme from July 1st, while existing government employees will continue to receive pensions from the official budget. However, the government may transfer existing employees to the new pension scheme with their consent.
The Securities Exchange Commission of Pakistan (SECP) has developed the new pension scheme, which it recommends implementing not only in the government sector but also in the private sector. The SECP suggests that instead of offering Provident Fund or Gratuity, the private sector should provide the voluntary pension scheme to employees, as these alternatives do not offer regular income to retirees.
Also Read: Non-Filers Face Travel Restrictions and Account Suspensions by FBR
The voluntary pension scheme ensures that employees’ pension benefits continue even if they change jobs. Presently, there are 43 pension funds operating in Pakistan, with investments totaling above 61 billion rupees.
Khyber Pakhtunkhwa (KP) was the first government to invest in pension funds two years ago, with 21 pension funds currently operational for KP government employees. Additionally, the Punjab government is considering implementing the Voluntary Pension Scheme to alleviate the financial burden on the provincial budget and has sought support from the SECP for its implementation.
The IMF has reportedly urged Pakistan to initiate the voluntary pension scheme to reduce the existing pension burden on the budget. The government plans to legislate for the voluntary pension scheme in the upcoming finance bill, as per sources from the Ministry of Finance.
