Govt minimises commercial banks' role in pension payments

ISLAMABAD: The finance ministry on Monday eliminated the administrative role of commercial banks in the biometric verification and validation of proof-of-life certificates (PoLCs), in a move aimed at facilitating pensioners.

The government also directed that pensioners’ bank accounts would not be subject to account dormancy requirements.

The Ministry of Finance issued revised standard operating procedures (SOPs) to enable digital proof-of-life certificates (PoLCs) and pension disbursements on the directives of Prime Minister Shehbaz Sharif.

“The federal government has formally eliminated the role of commercial banks in carrying out standard banking biometric verification or PoLC validation for pensioners,” the finance ministry said in its notification.

Instead, the National Database and Registration Authority (Nadra) has been integrated with the Controller General of Accounts (CGA) and Military Accountant General (MAG) via a secure application programming interface (API).

“The Digital Life Signal is transmitted directly from Nadra to CGA/MAG, bypassing commercial banking channels,” the notification said.

It added that under the new SOPs, commercial banks would serve solely as “pension disbursement agencies” and would have no statutory or administrative role in the verification, collection, retention or validation of PoLCs or biometric data under ordinary circumstances. The only exception would be when they act strictly as an authorised operational conduit through Nadra’s designated system for generating PoLCs.

“Furthermore, no pension-disbursing account of a pensioner shall be rendered dormant by the bank for the purpose of processing or disbursing pension payments,” the notification declared, adding that these SOPs superseded all previous SOPs.

It also formally abolished the physical “Disburser’s Half” process — paper documentation previously used for pension payments. Federal pensions will now be disbursed exclusively through the Direct Credit System (DCS).

The revised SOPs were developed in consultation with all stakeholders, including the State Bank of Pakistan, Accountant General Offices, Nadra and the finance ministry, to facilitate pensioners through a more convenient mechanism while strengthening verification.

The notification explained that pensioners’ accounts would no longer be marked as dormant, as already decided last month, for the purposes of the Federal Government Receipt and Payment Rules, 2025.

“Standard bank dormancy requirements are non-applicable to pension accounts,” the order said.

To enable the revised digital verification mechanism, pensioners would be able to complete PoLC verification via the Nadra PakID mobile app or authorised Nadra channels like Nadra Registration Centers, Mobile Units, e-Sahulat franchises or bank branches operating strictly as Nadra PoLC centers.

However, the pensioners would have to ensure biannual verification.

“Verification must occur at least once every six months or 180 days,” replacing the existing system of a bi-annual schedule fixed for March and September. “Pensioners may verify at any time within the 180-day interval”, it explained.

Family pensioners drawing pensions, subject to marital status conditions, must submit Form-12 declarations as required.

The notification said account transfers must be routed through the target scheduled bank, while overpayments or discrepancies must be reported directly to the relevant accounts office and the bank.

The SOPs also provided two options for activating dormant pensioners’ accounts: either undergoing biometric verification through Nadra’s system hosted at bank branches serving as PoLC verification centres, or receiving a pension credit from the CGA/MAG from September 2026 onwards.

Pension rolls will be generated by the 24th and verified by the 26th of each month for execution through the SBP’s RAAST or other micropayment channels. This will be subject to quarterly audits and reconciliation of Nadra logs.

The ministry has also directed banks to open pensioners’ accounts solely in the name of the pensioner or eligible family pensioner, prohibiting joint accounts.

Banks are not allowed to collect, retain, accept or verify physical life certificates or pensioners’ biometric data in their ordinary banking capacity for pension accounts.

Banks also cannot compel pensioners to visit branches for biometric verification of pension accounts for standard PoLC purposes.

On the other hand, if a pensioner approaches a branch with paper documentation, the bank shall direct them to the Nadra Pak-ID app or a designated Nadra registration centre and shall not collect, retain or process such documentation.

Under no circumstances can a bank place a pension account on dormant status, for the purposes of the Federal Government Receipt and Payment Rules, 2025.

“Banks shall not impose debit restrictions due to non-submission of proof of life to the bank.”

The banks have been directed to reactivate accounts marked dormant before August 22, 2026, either following Nadra verification at an authorised branch conduit or upon confirmation of pension receipt from CGA/MAG from September 2026 onwards.

Moreover, if an account was placed in ‘suspense status’ by CGA/MAG and funds remained uncollected, banks would remit the funds to the government upon receipt of formal notice from the CGA. Banks shall not independently suspend or close accounts.

For pensioners unable to use the Pak-ID mobile app due to lack of digital access, advanced age or debilitating medical conditions, or in family pension cases where real-time data regarding remarriage or marital status has not been updated in Nadra records, individuals may visit a designated District Accounts Office or Pension Facilitation Centre under CGA/MAG to submit a manual life certificate (Form 10) or declaration (Form 12) regarding remarriage or marital status.

In such cases, authorised personnel would upload the documents directly into the centralised system, and “commercial banks are strictly prohibited from accepting or processing Form 10 or Form 12 directly”, the notification said.

Finally, quarterly reconciliations shall be carried out between accounts offices and banks based on API logs and digital ledgers. Discrepancies would be resolved within six weeks.