The federal government has officially launched a new Contributory Pension Fund Scheme for civil employees, including those paid from Defense Estimates, who are appointed on or after July 1, 2024. This initiative is part of broader pension reforms aimed at ensuring financial sustainability while offering long-term security for government employees.
The Finance Division issued an office memorandum on Tuesday, stating that the scheme will also be applicable to members of the Armed Forces appointed on or after July 1, 2025. The pension scheme represents a significant shift from the traditional model, with both employees and the government contributing to the fund.
According to the memorandum, the contribution rates under the new scheme are as follows:
- 10% of Basic Pay contributed by employees
- 20% of Basic Pay contributed by the federal government
The Finance Division highlighted that these contribution rates are provisional and subject to future adjustments as needed. The scheme’s objective is to create a more sustainable pension system that balances employee benefits with fiscal responsibility.
This pension reform comes after the Economic Coordination Committee (ECC) of the Cabinet gave its principle approval for establishing a pension fund in June 2024. The move is aimed at reducing the financial burden of pensions on the national budget while ensuring that government employees continue to receive adequate retirement benefits.
The new scheme is part of the government’s efforts to modernize its pension system, and it reflects the growing global trend towards contributory pension models, which share the responsibility of retirement savings between the employer and employee.