Federal Government Begins Defined Contribution Pension Scheme

ISLAMABAD: The Ministry of Finance has instructed all federal ministries and divisions to begin implementing the Federal Government Defined Contribution (DC) Pension Fund Scheme-2024, signaling that the scheme has moved into its operational stage.

The directive was issued through an office memorandum dated August 11, 2026. The pension scheme was introduced under the Federal Government Defined Contribution Pension Fund Scheme Rules, 2024, and formally came into effect on July 1, 2024.

Implementation will involve the Accountant General, Finance Division and all federal ministries, divisions, departments and subordinate offices. Under Rule 6 of the scheme, the Finance Division has the authority to issue instructions and guidelines necessary for its execution.

To facilitate a coordinated rollout, the Finance Division has instructed every ministry and division to nominate a focal officer of BS-17 or above to oversee matters related to the scheme. Details of the nominated officers are required to be provided to the Finance Division and the Accountant General of Pakistan Revenues (AGPR).

Federal ministries have also been directed to establish a designated office or section responsible for checking, certifying and maintaining employee information required under the pension framework. They must identify and verify employees appointed on a regular basis on or after July 1, 2024, who fall under the scheme and submit updated information to AGPR within 15 days of receiving the memorandum.

The same implementation measures must be extended to departments and subordinate offices operating under the administrative control of each ministry or division. The Finance Division’s HRM Wing has been assigned a similar responsibility for organizations under its jurisdiction.

Meanwhile, the Controller General of Accounts has been instructed to coordinate with AGPR and submit a consolidated and verified database of employees enrolled in the pension scheme. The information is to be categorized by ministry, division, department and basic pay scale (BPS).

Under the rules notified through SRO 1728(I)/2025 on August 27, 2025, federal government employees, including civilians paid from defence estimates, are required to contribute 10% of pensionable pay each month, while the government contributes 12%. This brings the combined monthly contribution to 22%. The notified rules did not specify contribution rates for Armed Forces personnel.

The scheme requires covered employees to establish pension accounts with eligible pension fund managers. Upon retirement, an employee may withdraw up to 25% of the accumulated amount, while the remaining balance must remain invested for at least 20 years or until the employee’s death, whichever occurs earlier, under the Voluntary Pension System Rules, 2005.