New pension rules in KP – Full details here

New pension rules in KP - Full details here

New pension rules in KP – Full details here

The Khyber Pakhtunkhwa (KP) government has announced a revival of the pension system by amending the Civil Servants Act, 1973. The act abolished the monthly pension payment and changed it into a lump sum pension payment.

This new system, known as the “Contributory Pension System,” involves deductions from employees’ salaries based on their pay grade, with the provincial government matching these contributions.

A fixed bank account will be set up to manage these funds, confirming that the payments will not burden the treasury when they are paid out. This system, which changes the monthly pension system, has been officially announced and will apply to all employees hired after June 2022, although it has yet to be implemented for the Civil Administration.

The Finance Department of KP simplified that new employees will receive a lump sum pension after termination of their employment. The pension fund will be built up from monthly contributions of the basic salaries of employees, with matching contributions from the government. These funds will earn interest, which certifies that the system remains financially viable without putting the treasury in trouble.

In addition, the Treasury Department indicated that the federal government is implementing a similar pension system to create a uniform approach across the country.

According to details, the monthly pension scheme will be phased out, but the lump-sum payments upon retirement will be more extensive. The new scheme also includes provisions for interest-free loans to help workers carry out projects such as building a house before retirement.

The expansion of the program now includes new officials joining the provincial bureaucracy, making KP the first province to abolish the traditional pension system for government employees.