ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has decided to establish the pension funds from 1st July 2024 in order to deal with rapidly increasing pension expenses, said the Finance Ministry.
A statement of the Finance Ministry issued after the ECC meeting presided over by the Finance Minister Muhammad Aurangzeb said that the ECC also gave the principle approval to the Finance Division for the establishment of Pension Fund.
The meeting also approved the proposal of defined contributory scheme for the new entrants w.e.f. 1st July, 2024, and for armed forces w.e.f. 1st July, 2025.
Retired govt employees’ pensions: Notification likely to be issued very soon
However, sources said that the ECC was also proposed amendments in the pension scheme to be applicable from July 1, 2024.
The proposed amendments linked the gross pension to 70 per cent of average pensionable emoluments drawn during the last 24 months of service prior to retirement.
The meeting was proposed that a pension fund may be established utilising the savings that are likely to accrue from proposed reforms for capitalising the proposed fund, and a defined contributory scheme may be introduced in federal government for new entrants w.e.f. 01.07.2024.
In a summary, the Finance Ministry argued that pension is currently admissible to the entitled employees and their families, however, the problem is that the expenditure on account of pension is increasing day by day and is becoming unsustainable.
According to the proposed amendments, calculation of gross pension would be done for federal government employees based on 70 per cent of average pensionable emoluments drawn during the last 24 months of service prior to retirement.
A federal government employee may opt for retirement after putting in 25 years in service, however, the employee shall be liable to a flat reduction rate of three per cent per year in gross pension based on the number of completed months from the date of retirement to the date of superannuation. Such flat reduction if gross pension shall be capped at 20 per cent.
However, in cases of Armed Forces and Civil Armed Forces voluntary retirement penalties will apply only if retirement is sought/granted prior to the prescribed rank service.
The net pension calculated at the time of retirement will be termed as baseline pension and any increase in pension shall be granted on baseline pension.
Each increase shall be maintained as a separate amount until the time, the federal government decides to review and authorise any additional pensionary benefits and baseline pension will be reviewed by the Pay and Pension Committee after every three years, provided that the current pension of existing pensioners on the date of issuance of these amendments shall be considered as baseline pension. Provided further that baseline pension is deemed to include restored commuted portion of pension as and when restored.
Ordinary family pension, after the death or ineligibility of the spouse shall be admissible to remaining entitled family members for a maximum period of 10 years provided that; (i) in case of disabled/special children of a pensioner, the ordinary family pension shall remain admissible for life of such children; (ii) on case of the entitled children, ordinary family pension shall remain admissible for 10 years or till the age of 21 years whichever is later.
Special family pension, after the death or ineligibility of the spouse/first recipient, shall be admissible to remaining entitled family members for 25 years after the death or ineligibility of spouse/first recipient; (iii) in case of disabled/special children of a pensioner, the special family pension shall remain admissible for life of such children.
The rate of such pension for eligible recipients is enhanced to 50 per cent of last drawn pension admissible to the first recipient for all ranks of Armed Forces/Civil Armed Forces without minimum/maximum limits and transferable to all eligible heirs as per order prescribed in Rule 12 of Pension Regulations Vol-I (Armed Forces), 2010.
In an event where a pensioner of the federal government after the age of 60 years, is re-employed/appointed in public service after retirement whether on regular/contract basis or whatsoever mode of employment, the pensioner shall have the option to retain either his/her pension or to draw the salary of said employment during the currency of that employment.
In an event where a person becomes entitled to more than one pension, such person shall only be authorised to opt to draw one of the pensions, provided that; (i) where an in-service federal government employee becomes entitled to a pension, such Federal government employee shall not be eligible to receive such pension; (ii) The in-service pensioner/spouse shall be eligible for pension of his/her spouse in addition to his/her own pension.
Copyright Business Recorder, 2024
Comments
Comments are closed.