In a significant move, the Pakistani government has announced the introduction of a new Voluntary Pension Scheme for employees, set to come into effect from July 1st. This decision, made in response to demands from the IMF, aims to overhaul the existing traditional pension setup.
Under the new scheme, all newly recruited government employees will be enrolled in the Voluntary Pension Scheme, while existing employees will continue to receive pension from the official budget. However, they will have the option to transition to the new scheme with their consent.
Developed by the Securities Exchange Commission of Pakistan (SECP), the Voluntary Pension Scheme is designed to provide a more sustainable and reliable retirement income for employees. It seeks to address the limitations of the current system, such as the lack of regular income post-retirement.
Notably, the private sector will also be encouraged to adopt the Voluntary Pension Scheme, replacing existing Provident Fund or Gratuity schemes. This move is aimed at ensuring consistent pension benefits for employees across both public and private sectors.
The introduction of the Voluntary Pension Scheme is expected to reduce the financial burden on the government budget, as well as provide greater financial security for retirees. With the support of the SECP, the scheme will be implemented nationwide, benefiting employees from various sectors.
In addition, the Punjab government is actively considering the adoption of the new scheme, following the example set by Khyber Pakhtunkhwa, which has already invested in pension funds.
Legislation for the Voluntary Pension Scheme will be included in the upcoming finance bill, demonstrating the government’s commitment to modernizing the pension system in line with international standards and recommendations from global financial institutions like the IMF.
