Pension-Pay & Allowances

Notification / OM No. No.FD-SR-III-4-239/2023 Dated 19-February-2025 Notification Issued By: Finance Department, Government Of The Punjab Punjab’s New Pension Scheme 2025 – What It Means for Government Employees: In a significant move towards pension reform, the Punjab Government has officially announced the Punjab Defined Contribution Pension Scheme Rules 2025 through a formal notification. This new scheme is set to redefine the pension structure for newly appointed government employees, ensuring a sustainable retirement fund model. Under this scheme, both employees and the government will contribute to a dedicated pension account, which will be invested through approved pension fund managers. Employees will have the choice between conventional and Shariah-compliant investment options, allowing flexibility in financial planning for retirement. This reform aims to modernize the pension system by aligning it with international best practices, ensuring financial security for employees while reducing the long-term burden on the provincial government. The new rules apply to civil servants hired after the enactment of the Punjab Civil Servants (Amendment) Ordinance 2023 and those regularized under new government policies. The notification details the governance, contribution structure, roles of employees and employers, and fund management policies to be followed under the new pension scheme. Please find the official notification below: GOVERNMENT OF THE PUNJABFINANCE DEPARTMENTDated: Lahore, the 19th February,2025 Notification No.FD-SR-III-4-239/2023. In exercise of the powers conferred under section 23 of the Punjab Civil Servants Act, 1974 (VIII of 1974), Governor of the Punjab is pleased to make the following rules: 1.         Short title, commencement and application.- (1) These rules may be cited as the Punjab Defined Contribution Pension Scheme Rules 2025. (2) They shall come into force at once. (3) They shall apply to all the employees mentioned in clause (g) of sub-rule (1) of rule 2 of the rules. 2.         Definitions.- (1) In the rules, unless the subject or context requires otherwise: (a)       “Accountant General” means the Accountant General, Punjab; (b)       “Act” means the Punjab Civil Servants Act, 1974 (VIII of 1974); (c)       “allocation policy” means allocation of contributions, in various sub-funds of an employer pension fund, in accordance with the rules and governed by the Voluntary Pension System Rules, 2005 and the Non- Banking Finance Companies Regulations, 2008; (d)       “conventional fund” means a type of employer pension fund, to be managed by the Eligible Pension Fund Manager, in a conventional manner, in accordance with the Voluntary Pension System Rules, 2005; (e)        “Defined Contribution Pension Scheme” means the Defined Contribution Pension Scheme as specified in section 18-A of the Act and the rules and governed in accordance with the Voluntary Pension System Rules, 2005 and the Non-Banking Finance Companies Regulations, 2008, in which both the employer and employee contribute, as per the First Schedule, to the employee’s pension account, opened with an Eligible Pension Fund Manager of the employee’s choice and such contributions are invested in an employer pension fund, as defined under the Voluntary Pension System Rules, 2005, either in a conventional fund or a Shariah compliant fund, as selected by the employee, until the employee attains retirement age, and the accumulated balance in the pension account at the time of retirement is withdrawn or invested further to generate monthly income during the post- retirement phase, subject to exceptions under the rules; (f)        “Eligible Pension Fund Manager” means a Pension Fund Manager who qualifies the criteria as specified in sub-rule (13) of rule 4 and has entered into an agreement with the employer to establish and manage employer pension funds for the employees; (g)       “employee” means: (i)        a person appointed on or after the commencement of the Punjab Civil Servants (Amendment) Ordinance 2023 (I of 2024) but not including any person who was appointed as Government servant holding pensionable post before the commencement of the said Ordinance, and was subsequently inducted into any Provincial service through proper channel after coming into force of the Punjab Civil Servants (Amendment) Ordinance 2023 (I of 2024); or (ii)       a person regularized as a civil servant through any legal instrument issued on or after the commencement of the Punjab Civil Servants (Amendment) Ordinance 2023 (I of 2024) and shall be considered an employee for the purposes of the rules from the date of issuance of such legal instrument, regardless of the effective date of regularization. Provided that an employee shall, subject to sub-rule (3) of rule 5 of the rules, be deemed to be an employee solely for the purposes of the Defined Contribution Pension Scheme until reaching retirement age and no further contributions shall be made to his pension account by either the employer or the employee in the event of his leaving service before attaining retirement age for any reason whatsoever. (h)       “employee’s contribution” means the amount computed by multiplying the employee’s pensionable pay with the employee’s contribution rate specified in the First Schedule; (i)        “employer” means the Government; (j)        “employer’s contribution” means the amount computed by multiplying the employee’s pensionable pay with the employer’s contribution rate specified in the First Schedule; (k)       “Finance Department” means the Department, Government of the Punjab; (l)        “overall contribution” means the sum of employer’s contribution and employee’s contribution as per the First Schedule; (m)      “pension account” means an account opened and maintained by an employee with the Eligible Pension Fund Manager as per the Voluntary Pension System Rules, 2005; (n)       “Pension Fund Manager Agreement” means an agreement between the employer and the Eligible Pension Fund Manager for the Defined Contribution Pension Scheme; (o)       “pensionable pay” means the running basic pay but does not include any other pay, allowances or perquisites; (p)       “retirement age” means the retirement age as specified in section 12 of the Act; (q)       “rules” means the Punjab Defined Contribution Pension Scheme Rules 2025; (r)        “salary” means the monthly amount being drawn as pay and allowances by the employee; (s)        “Schedule” means the Schedule appended to the rules; and (t)        “Shariah compliant fund” means a type of employer pension fund, governed by the requirements of Shariah