The Finance Department has released Rs. 622.4 million to support the implementation of pension reforms and facilitate the transition toward a new contributory pension system for government employees.
Under the proposed system, both employees and the government will contribute to a pension fund. The reforms are part of Pakistan’s broader move toward defined-contribution pension arrangements for new government employees, aimed at reducing the long-term financial burden of pension payments on public finances.
At the federal level, a contributory pension framework has already been formalized for new entrants. Under the Finance Ministry’s rules, employees will contribute 10% of their pensionable pay, while the government will contribute 12%, bringing the combined contribution to 22%.
The Finance Ministry also issued an implementation notification in August 2026 for the Defined Contribution Pension Fund Scheme. A list of eligible pension fund managers was published in July.
Meanwhile, Punjab allocated Rs. 500.12 billion for pension expenditure in its 2026-27 budget after approving a 3.5% increase in pensions. The allocation highlights the significant fiscal cost of pension payments.
The latest funding is expected to support the implementation of pension reforms, while further details will determine how contributions from employees and the government will be managed under the new system.
