Government of the Punjab, Finance Department issued a Notification FD-SR-III-4-239/2023 on 19-02-2025 in connection with Punjab Defined Contribution Pension Scheme Rules 2025. Finance Department Punjab has issued the rates of monthly contribution of Pension for the pensioners. These new rates are applicable with immediate effect.

 

Punjab Defined Contribution Pension Scheme Rules 2025

 

As per the Notification, In exercise of the powers conferred under section 23 of the Punjab Civil Servants Act, 1974 (VIII of 1974), the Governor of the Punjab is pleased to make the following rules:

 

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.

 

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 the allocation of contributions, in various sub-funds of an employer pension fund, by 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, conventionally, by 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 by 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the employee attains retirement age, and the accumulated balance in the pension account at the time of retirement is withdrawn or invested further to generate monthly income during the post-retirement phase, subject to exceptions under the rules;

“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;

“employee” means:

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 a Government servant holding a 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

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 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 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.

“employee’s contribution” means the amount computed by multiplying the employee’s pensionable pay with the employee’s contribution rate as specified in the First Schedule;

“employer” means the Government;

“employer’s contribution” means the amount computed by multiplying the employee’s pensionable pay with the employer’s contribution rate as specified in the First Schedule;

“Finance Department” means the Finance Department, Government of the Punjab;

“overall contribution” means the sum of the employer’s contribution and the employee’s contribution as per the First Schedule;

“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;

“Pension Fund Manager Agreement” means an agreement between the employer and the Eligible Pension Fund Manager for the Defined Contribution Pension Scheme;

“pensionable pay” means the running basic pay but does not include any other pay, allowances or perquisites;

“retirement age” means the retirement age as specified in section 12 of the Act;

“rules” means the Punjab Defined Contribution Pension Scheme Rules 2025;

“Salary” means the monthly amount being drawn as pay and allowances by the employee;

“Schedule” means the Schedule appended to the rules;

“Shariah-compliant fund” means a type of employer pension fund, governed by the requirements of Shariah law, to be managed by the Eligible Pension Fund Manager by the Voluntary Pension System Rules, 2005.

A word or expression used but not defined in the rules shall have the same meaning as assigned to it in the Act and the Voluntary Pension System Rules, 2005.

 

Governance of the Defined Contribution Pension Scheme

 

Save as otherwise provided in the rules, the Defined Contribution Pension Scheme shall be governed as per the Voluntary Pension System Rules, 2005, and the Non-Banking Finance Companies Regulations, 2008.

The Defined Contribution Pension Scheme shall be managed through the Eligible Pension Fund Managers.

The balance in the pension account including the employer’s contribution and employee’s contribution and the return thereon shall be subject to the rules.

 

Role and responsibilities of the employer

 

The Finance Department shall ensure the deduction of the employee’s contribution, at source, at the time of payment of each salary to the employee through Accountant General Punjab.

 

The employer’s contribution shall be in addition to the salary otherwise payable to the employee.

The employer shall not be under any obligation to make any additional contribution or payment for the Defined Contribution Pension Scheme in addition to the rates as mentioned in the First Schedule.

The employer shall ensure budgetary allocations for its contribution and the Finance Department shall release funds promptly, without any exception.

The Accountant General shall transfer the overall contribution in the employee’s pension account at the time of payment of salary to the employee through an automated system implemented and managed by him without any delay.

The Accountant General shall be responsible for the deduction, transfer, accounting, and reconciliation of both, the employer’s contribution and the employee’s contribution.

The Accountant General shall forward monthly reports to the Punjab Pension Fund regarding the transfer of contributions by the agreed-upon reporting format and timelines.

In the case where the salary of an employee is disbursed by an entity owned or controlled by the Government other than the Accountant General or the District Accounts Office, as the case may be, the Drawing and Disbursing Officer of such entity shall deduct the employee’s contribution and deposit the same into the bank account designated by the Accountant General by the monthly date and in the manner as specified by the Accountant General till the salary of such employee begins to be disbursed through the Accountant General or the District Accounts Office, as the case may be:

Provided that in the event of any delay in depositing the deducted amount, the Drawing and Disbursing Officer shall be personally liable to compensate the employee by making an additional contribution to be determined by the Punjab Pension Fund to the employee’s pension account to cover any profit that the employee would have earned or any gain that would have realized by him, had the employee’s contribution been deposited on time.

The Accountant General shall process the first salary of an employee only after receiving the information regarding his pension account as per clause (b) of sub-rule (1) of rule 5 of the rules.

Explanation: “First Salary” in this rule shall mean the salary that shall be disbursed after a person becomes an employee.

The Accountant General shall provide information regarding the accumulated employee’s contributions and employer’s contributions to date on the employee’s salary slip.

The Accountant General shall compute and deduct income tax from the employee’s salary as per the Income Tax Ordinance, 2001 (XLIX of 2001).

The Accountant General shall not deduct and transfer the overall contribution for any employee whose pension account has not been opened. On opening of his pension account, any outstanding overall contributions for the period commencing from the date he becomes an employee till the date of opening of his pension account shall be deducted and transferred to his pension account in future months in addition to the regular overall contributions as per the First Schedule:

Provided that such additional overall contribution shall not be more than the regular overall contribution until all the outstanding overall contributions are accounted for.

The employer shall, through the Finance Department, enter into the Pension Fund Manager Agreement with each of the Pension Fund Managers who:

(a) is authorized under the Voluntary Pension System Rules, 2005 to manage employer pension funds;
(b) meets the asset manager rating criteria specified in the Voluntary Pension System Rules, 2005;
(c) has systems that support the electronic transfer of contributions; and
(d) has applied to the Government to provide services for managing pension fund(s) for its employees by the rules and the Voluntary Pension System Rules, 2005.

The Pension Fund Manager Agreement shall specify the standard terms and conditions including a mandatory insurance plan providing death and disability risk cover to the employees to be arranged by the Eligible Pension Fund Manager by the Pension Fund Manager Agreement.

The Finance Department shall notify a list of Eligible Pension Fund Managers and publish it on its website and keep the same updated.

The employer may, through the Finance Department, terminate the Pension Fund Manager Agreement with the Eligible Pension Fund Manager by the terms and conditions specified in the Pension Fund Manager Agreement.

The Finance Department shall ensure that each Eligible Pension Fund Manager establishes separate pension fund(s) for the Defined Contribution Pension Scheme and each pension fund shall include the sub-funds as specified by the Finance Department.

 

The Punjab Pension Fund shall

 

(a) Monitor the Defined Contribution Pension Scheme.

(b) Establish and maintain an online portal to facilitate the smooth opening of pension accounts and the ongoing monitoring of the Defined Contribution Pension Scheme, providing a user-friendly interface for employees to open their pension accounts and communicate with the Punjab Pension Fund. It shall enable real-time data sharing between the Punjab Pension Fund, the Eligible Pension Fund Managers, and other relevant entities to ensure transparency, efficiency, and effective management of the Defined Contribution Pension Scheme.

(c) Require and analyze periodic reports from the Eligible Pension Fund Managers, including but not limited to information regarding:
(i) Number of pension accounts;
(ii) Number of pension account holders;
(iii) Amount of contributions received;
(iv) Performance of sub-funds of the pension funds being managed;
(v) Pension account holders who have reached the retirement age and amount withdrawn by such pension account holders; and
(vi) Number of employees who have invested in monthly income plans and annuities, and the amount of monthly profit and annuity paid to such employees.

(d) Prepare and disseminate training materials for the education of employees regarding:
(i) The Rules and Voluntary Pension System Rules, 2005;
(ii) Selection from among the Eligible Pension Fund Managers;
(iii) Opening of pension accounts;
(iv) Setting up online access to pension accounts;
(v) Choosing or revising allocation policies;
(vi) Understanding account statements;
(vii) Updating any changes in personal information.

Continuing from the Punjab Pension Fund responsibilities:

(e) Provide separate updated lists to the Eligible Pension Fund Managers regarding employees:
(i) Whose pension accounts are to be opened;
(ii) Who have left employment before reaching retirement age;
(iii) Who have attained retirement age;
(iv) Who has died before or after attaining retirement age?

(f) Act as an intermediary between employees and Eligible Pension Fund Managers for pension account openings and necessary tasks, including obtaining information from employees as per a jointly developed template, sharing data with fund managers, resolving discrepancies, and ensuring timely account openings.

(g) Ensure that only one designated pension account per employee is recorded with the Accountant General.

(h) Assist employees in resolving issues such as updating personal information, using online services, understanding account statements, and notifying account holders of Pension Fund Manager Agreement termination or cancellation by the employer.

(i) Coordinate with relevant stakeholders to address issues related to the Defined Contribution Pension Scheme.

(j) Develop standard operating procedures (SOPs) for its functions.

(k) Perform any other related functions as necessary.

 

Roles and Responsibilities of the Employee

 

(1) The employee shall:
(a) Open a pension account with the Eligible Pension Fund Manager of choice upon becoming an employee, in coordination with the Punjab Pension Fund.

(b) Provide relevant pension account information, including selection between conventional or Shariah-compliant funds, to the Accountant General through the concerned Drawing and Disbursing Officer using prescribed forms.

(c) Contribute to the pension account using your salary as per the rules.

(d) Be entitled to the pension account balance from the date of qualifying for the Defined Contribution Pension Scheme, subject to the Voluntary Pension System Rules, 2005.

(e) Determine the allocation policy for pension contributions among the sub-funds of the employer pension fund, within the exposure limits specified in the Second Schedule.

• Communicate any changes in the allocation policy to the Eligible Pension Fund Manager through the Punjab Pension Fund.
• If no allocation policy is specified, the default allocation policy under the Third Schedule shall apply.

(f) Have the option to transfer the pension account from one Eligible Pension Fund Manager to another under the Voluntary Pension System Rules, 2005.

(g) Not withdraw any amount from the pension account before reaching retirement age.

(2) Upon attaining retirement age:

• The employee may withdraw up to 25% of the pension balance as a lump sum.
• The remaining balance must be invested as per the Voluntary Pension System Rules, 2005, for at least 20 years or until death, whichever is earlier.

(3) Leaving service before retirement age:

• The employee may notify the Punjab Pension Fund in writing if opting for an alternative arrangement.

Additional Provisions

(4) Employee Liability for Pecuniary Loss:

• If an employee’s action, omission, or negligence causes financial loss to the Provincial exchequer, they will be personally liable to compensate for the loss.
• Liability will be enforced under the Punjab Employees Efficiency, Discipline, and Accountability Act 2006 (XII of 2006).
• This liability also applies to losses discovered after retirement by the provisions of the Act.

Issued by:
SECRETARY
GOVERNMENT OF THE PUNJAB FINANCE DEPARTMENT

 

First Schedule – Contribution Rates

 

Head	Monthly Contribution Rate (% of pensionable pay)
Employer’s Contribution	12%
Employee’s Contribution	10%
Overall Contribution	22%

 

SECOND SCHEDULE, MAXIMUM AGGREGATE EXPOSURE LIMIT

 

Age of employee	Maximum aggregate exposure limit for high-risk sub-funds (as % of employee’s pension account balance)
	Equity Index Sub-Fund
For 3 years from the date of opening of the employee’s pension account (regardless of age)	0%
≤ 30 years	50%
≤ 40 years	40%
≤ 50 years	30%
≤ 60 years	20%

 

THIRD SCHEDULE, DEFAULT ASSET ALLOCATION

 

Age	Equity Index (High Risk)	Equity Active (High Risk)	Debt (Medium Risk)	Money Market (Low Risk)
For 3 years from the date of opening of the employee’s pension account (regardless of age)	0%	0%	0%	100%
≤ 30 years	30%	10%	30%	30%
≤ 40 years	20%	10%	30%	40%
≤ 50 years	15%	5%	20%	60%
≤ 60 years	10%	0%	10%	80%

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