Sindh Government Directs Local Councils to Establish Pension, Provident, and Benevolent Funds–High Court Orders Compliance

Sindh High Court Enforces Pension Fund Allocation for Local Councils – Urgent Notification Issued:

In a significant ruling, the Honorable High Court of Sindh, Karachi, has directed all Local Government Councils in the province to allocate 20% of their total revenue toward the establishment of Pension, Provident, and Benevolent Funds. This directive comes under Const. Petition Nos. D-3393 of 2023, issued on March 12, 2025, ensuring that employees’ retirement benefits remain secure.

The Local Government & Housing Town Planning Department, Government of Sindh, has issued an urgent notification instructing Metropolitan and Municipal Corporations, Town Committees, Union Councils, and District Councils to comply with this ruling within three days. The funds must be deposited in separate accounts and should be used exclusively for employee pensions and related benefits.

This measure aligns with Section 125 of the Sindh Local Government Act, 2013, reinforcing the legal obligation of councils to provide financial security to employees. Immediate action is required to ensure compliance and avoid legal consequences.

COURT MATTER
MOST URGENT

No. 80-V(LG)/1-78/2019
GOVERNMENT OF SINDH
LOCAL GOVERNMENT & HOUSING
TOWN PLANNING DEPARTMENT
Karachi, dated the 18^th March, 2025

To

The Municipal Commissioner, Metropolitan / Municipal Corporation(s) (all in Sindh).

The Town Municipal Commissioner, TMC(8) (all in Sindh).

The Chief Officer, District Council(s) (all in Sindh).

The Chief Municipal Officer, Municipal Committee(s) (all in Sindh).

The Town Officer, Town Committee(s) (all in Sindh).

The Secretary, Union Council(s) / Union Committee(s) (all in Sindh).

Subject:               ESTABLISHMENT OF PENSION FUND, PROVIDENT FUND AND SOCIAL INSURANCE.

                              I am directed to draw your attention towards the decision of Hon’ble High Court of Sindh, Karachi viz. Const. Petition Nos. D-3393 of 2023 dated: 12.03.2025 specifically para 11 of the aforesaid decree wherein, the Hon’able High Court of Sindh has required that out of the reasonable amount of the total income generated through own sources from the area under jurisdiction, 20% of it is paid into a separate account which should be used for the payment of pension only and no money should be withdrawn from that account for any other purpose.

                              In addition to above, according to section 125 of the Sindh Local Government Act, 2013 which provides that (1)A Council may establish and maintain (a)Provident Fund for the benefits of its employees, who shall contribute to such fund in such manner and proportion as may be prescribed; (b)Pension Fund from which pension, shall, in the prescribed manner, be paid to the employees of und, in the prescribed manner from which any special pension or gratuity, shall, in the prescribed manner be paid to the family of an employee of the Council, who dies of the disease or injury contracted or suffered by him in the discharge of his official duties.

                              In compliance thereof, all the Local Councils are requested to establish such separate accounts for the pension, provident and benevolent funds and maintain the same by depositing 20% as per the formula devised in the aforementioned decree as well as contributions/ deductions from salaries of employees of the Councils and furnish detailed report into the matter within three (03) days positively.

SECTION OFFICER-V

Ensuring Financial Security for Local Government Employees – A Necessary Step Forward:

The establishment of dedicated Pension, Provident, and Benevolent Funds is a crucial step toward ensuring financial stability and job security for government employees in Sindh. By enforcing a 20% revenue allocation, the Sindh High Court aims to create a sustainable retirement system that protects workers’ future.

All relevant local bodies must act promptly and provide a detailed compliance report within three days. Failure to adhere to this directive may lead to strict legal action. The Sindh Government remains committed to transparency, accountability, and employee welfare in the public sector.

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