KP govt to abolish existing system of pensions

PESHAWAR: The Khyber Pakhtunkhwa government has encouraged the abolition of the existing system of pensions for government employees under pension reforms and the introduction of a contributory pension system to reduce the burden of Rs92 billion annually on the provincial treasury.

All new employees will be paid on a monthly basis. 

According to the ongoing minutes of the recent session of the provincial assembly, the provincial cabinet has approved the proposed amendment to Section 19 of the Khyber Pakhtunkhwa Civil Servants Act 1973, after which it will be billed. 

Regular legislation will be enacted, the new law will apply to all new employees recruited after July 2021, according to top officials. 

If the pension reforms agenda is not implemented, the annual expenditure in terms of pension can reach Rs 100 billion per annum. 

In a recent cabinet meeting on the proposed amendment to the Pension Reforms, Khyber Pakhtunkhwa Civil Servants Act 1973, the secretary Establishment said the Civil Servants Act 1973 has introduced a new contractual pension system through Clause 19 which has been recruited after July 1, 2021. 

In response to a question of the provincial minister of Education regarding the continuous increase in the annual bill of pension, the cabinet was reluctant to the appointment of new government employees.

The pension bill for the current financial year has reached Rs 92 billion, which is increasing to 22 per cent per annum. 

The provincial government’s pension bill will soon exceed Rs1 billion, after which it will be difficult to pay pensions to existing government employees. 

The cabinet said the contractual pension system would be applied to new recruits, and that immediate pension expenses are likely to be reduced. The secretary Law, emphasizing the approval of the proposed amendment, said this new precedent is therefore a luxury because the pensions of government employees retiring in near future are at risk. The Establishment was allowed to prepare a bill for formal legislation in this regard and present it to the provincial assembly.