Govt set to introduce voluntary pension scheme to fulfil another IMF condition

The government is set to launch a new, optional pension program on July 1 as part of meeting the International Monetary Fund’s (IMF) requirements.

Government insiders have indicated that this scheme is designed to reduce the hefty pensions the government currently shoulders and to organize the pension system more efficiently.

New government hires are going to be enrolled in this optional pension plan instead of the conventional system.

The Securities and Exchange Commission of Pakistan (SECP), with input from the Ministry of Finance, has formulated a detailed plan for these new government employees.

Sources state, ‘Voluntary pensions will be provided to new government workers instead of the traditional government pension. Current employees have the choice to switch to this new system if they wish.’

This initiative aims to ensure a reliable income for government retirees, offering a more stable solution than the Provident Fund or gratuity services that the private sector typically provides. The SECP’s proposal extends to both public and private sectors, promoting economic safety for workers in their later years.

Additionally, government sources shared that this voluntary pension scheme allows for pension retention even if employees change jobs, providing an uninterrupted financial safeguard after retirement. The SECP has recommended that the private sector adopt this voluntary pension system exclusively.

Currently, 43 pension funds are being set up across the country, with approximately Rs61 billion invested. Sources further said that the Khyber Pakhtunkhwa government took the initiative to invest in the pension funds two years ago, with 21 pension funds catering to its employees.

Following suit, the Punjab government is also poised to initiate a voluntary pension scheme for its employees, signalling a broader adoption of the pension reform initiative across various provincial governments.

The decision to introduce the voluntary pension scheme comes as part of the government’s efforts to address the concerns raised by the IMF regarding inflated pension costs. By implementing this scheme, the government aims to foster fiscal sustainability and ensure long-term financial stability in the country.