Key Takeaways
- The government has signed agreements with 16 pension fund managers to operationalize a new pension scheme.
- These include major banks and insurance companies, ensuring death and disability risk cover for employees.
- A Non-Banking Finance Company will assist in the implementation and monitoring of the pension fund scheme.
The government has taken significant steps towards reforming the pension system by entering into agreements with 16 eligible pension fund managers, marking a major development in public sector employee benefits.
Among these are ABL Asset Management Company, Al Habib Asset Management, and Faysal Asset Management, all of which are either owned or led by major commercial banks. Insurance companies such as EFU Life Assurance and Pak-Qatar Family Takaful have also been included.
The agreements aim to establish separate pension funds for state employees under the federal government’s defined contributory pension fund scheme, in line with the Voluntary Pension System Rules 2005.
Under these terms, only the eligible pension fund managers will be authorized to launch and manage employer pension funds. The government has committed to providing annual budgetary allocations for employer contributions.
The agreements also include provisions for mandatory insurance plans that provide death and disability risk cover to employees, managed by the fund managers themselves.
To support the implementation of this scheme, a Non-Banking Finance Company (NBFC) will be established. Until then, the government’s finance ministry will perform these functions through an online portal designed to facilitate pension account openings and communication with fund managers.
Employees are not allowed to withdraw any amount from their pension accounts before retirement is notified. Upon reaching retirement age, they can only withdraw up to 25% of the accumulated balance, with the remainder required to be invested according to prescribed rules for at least twenty years or until death.
The government’s move reflects a broader effort to address the growing burden on the budget from pension schemes and ensure sustainable financial planning for public sector employees.
