Islamabad, October 5, 2025 – The federal government has formally notified the Federal Government Defined Contribution Pension Fund Scheme Rules, 2024, introducing a major structural reform in the country’s retirement system.
This marks a shift away from the long-standing non-contributory arrangement toward a modern contributory pension 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 across all federal ministries, divisions, and attached departments for immediate implementation.
The new scheme will apply to future federal employees, replacing the old framework where pension liabilities were fully borne by the state. Under the contributory mechanism, the employer’s share has been fixed at 12 percent of pensionable pay for civilian employees, while the employee will contribute 10 percent each month. For members of the armed forces, contributions are still under consideration, and the process has not yet been initiated.
Officials highlighted that the reform aims to strengthen the sustainability of the pension system, which has become a mounting fiscal challenge. With pension liabilities consuming a significant portion of the federal budget, the new fund-based scheme is designed to reduce long-term pressures while aligning with international standards.
Both employee and government contributions will be pooled in a dedicated investment fund, and eventual retirement benefits will depend on the returns generated. The notification has also been forwarded to the Auditor General of Pakistan, AGPR, State Bank, and key ministries, including Defence, Education, and Railways, ensuring a smooth transition to the contributory pension framework.