Government Ends One-Year Pension Policy – Old Benefits Restored for New Employees

Government Ends One-Year Pension Policy – Old Benefits Restored for New Employees

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KARACHI, September 18, 2025 – The Sindh government has officially scrapped the contributory pension scheme introduced last year and reinstated the traditional pension system for all newly recruited provincial employees.

This major policy reversal, announced by the Finance Department on 17 September 2025, has restored old-age benefits, gratuity, and pensions for workers hired under provincial service rules.

Background – The Short-Lived Contributory Pension Scheme

In September 2024, the Sindh Cabinet, led by Chief Minister Murad Ali Shah, approved the Sindh Defined Contributory Pension Scheme (SDCPS).

Under that plan:

  • Employees were required to contribute 10% of their basic salary.

  • The government matched contributions with 12% each month.

  • Traditional pension and gratuity benefits were discontinued.

The scheme was legalized through amendments to the Sindh Civil Servants Act, 1973.

However, the policy immediately drew criticism from employees’ unions and financial analysts, who argued it placed an unfair burden on workers and lacked long-term sustainability.

Policy Reversal – Old Pension Restored

On 17 September 2025, the Sindh Finance Department issued a new notification:

This means that all employees recruited after November 2024—who were initially placed under the contributory plan—will now enjoy the same retirement benefits as earlier civil servants.

Why the Change?

Analysts suggest three key reasons behind this abrupt reversal:

  1. Employee Protests – Continuous pressure from unions and associations demanding restoration of the old scheme.

  2. Administrative Burden – Managing contributions and payouts created bureaucratic complications.

  3. Political Considerations – Reinstating the traditional system strengthens goodwill among government employees, a key voter base.

Concerns Moving Forward

While employees have welcomed the decision, experts remain cautious:

  • Financial Strain: Returning to the old pension model may increase the province’s fiscal liabilities in the long run.

  • Policy Instability: Frequent reversals indicate a lack of long-term planning in employee benefits.

  • Trust Issues: Government credibility has been questioned due to rapid changes in policy direction.

Final Thoughts

The end of the one-year pension experiment marks a significant win for government employees in Sindh, ensuring the continuation of secure retirement benefits.

However, this reversal also highlights deeper challenges in Pakistan’s pension sustainability debate. Without comprehensive reform, experts warn, rising pension costs may remain a long-term fiscal burden for the province.

For now, employees can breathe a sigh of relief as the traditional pension and gratuity system is back in force.

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