Khyber Pakhtunkhwa Contributory Provident Fund (CP Fund) Rules 2022: Complete Guide
The Government of Khyber Pakhtunkhwa introduced a landmark shift in the retirement benefits of provincial employees through the Khyber Pakhtunkhwa Civil Servants (Amendment) Act, 2022. This reform replaced the traditional pension system with the Contributory Provident (CP) Fund for new recruits.
Whether you are a new government employee or a financial researcher, understanding the KP CP Fund Rules 2022 is essential for future financial planning.
1. What is the CP Fund Scheme 2022?
The CP Fund is a Defined Contribution Pension Scheme. Unlike the old system where the government paid a fixed pension, the new system involves monthly contributions from both the employee and the government. These funds are then invested in professional asset management schemes.
Key Eligibility Criteria
According to the official notification, these rules apply to:
- New Recruits: All civil servants appointed on a regular basis on or after July 1, 2022.
- Regularized Employees: Employees regularized under any legal instrument after the commencement of the 2022 Act, regardless of their original joining date.
2. Contribution Rates & Financial Structure
The financial burden is shared equally between the employee and the KP Provincial Government.
| Contribution Type | Rate (% of Pensionable Pay) | Details |
| Employee Contribution | 10% | Deducted at source from basic pay + personal pay. |
| Government Share | 12% | Contributed by the KP Govt into the employee’s account. |
| Total Monthly Credit | 22% | Total amount invested monthly. |
Pro Tip: Employees have the option to voluntarily contribute more than 10% to increase their retirement nest egg, though the government’s share remains capped.
3. Investment Choices: Shariah vs. Conventional
The Finance Department of Khyber Pakhtunkhwa has categorized the funds into two tracks:
- Shariah-Compliant Fund: For employees who prefer interest-free, Islamic banking-compliant investments.
- Conventional Fund: Standard investment portfolios managed by Pension Fund Managers (like UBL, ABL, or MCB Funds).
Employees can track their balances via annual statements issued every August.
4. Withdrawal and Final Payment Rules
The KP CP Fund Rules 2022 provide clear guidelines on when you can access your money:
- At Retirement: Employees can withdraw the full accumulated balance (Contributed amount + Profit). They can also opt for an Annuity (monthly income plan).
- Early Exit (Less than 1 Year): If you leave before one year, you only receive your own contribution without profit.
- 1 to 3 Years Service: You receive your contribution plus a scaled percentage (25% to 50%) of the government’s share.
- 3+ Years Service: You are eligible for the 100% accumulated balance (Both shares + Profit).
- Death or Disability: The family/nominee receives the full balance immediately, regardless of service length.
5. Frequently Asked Questions (FAQs)
Is GP Fund and CP Fund the same?
No. GP Fund (General Provident Fund) applies to employees hired before July 2022. CP Fund is for those hired after July 1, 2022. You cannot be in both schemes at the same time.
Can I withdraw my CP Fund before retirement?
Early withdrawals are subject to specific conditions and tax implications under the Income Tax Ordinance 2001. Generally, full withdrawal is only permitted upon leaving service or retirement.
Is there a tax benefit?
Yes. Under Section 63 of the Income Tax Ordinance, employees can claim a Tax Credit on their contributions (up to 20% of taxable income).
