Pakistan ‘introduces’ pension reforms

ISLAMABAD: Pakistan government has ‘introduced’ pension reforms for retired employees, according to a notification issued by the finance ministry.

Sources privy to the development said, under the new rules, retired employees will not be entitled to both a salary and pension simultaneously if they rejoin any organization.

The reforms specify that retirees will only receive a pension, and if they resume employment, they will forfeit their pension for life.

In cases where the retired employee’s spouse is still working, they may continue receiving the pension until the spouse’s retirement. Furthermore, the pension will be calculated based on the average salary of the last 24 months of employment.

The new policy is expected to result in lower pension payouts, as the annual increase in pensions will also be based on the average salary.

The reforms were introduced following recommendations from the Pay and Pension Commission, with the aim of controlling the annual pension bill.

Also read: ‘Pension is a huge burden on government’

The IMF has been informed about these pension reforms, and the Ministry has issued a formal notification to implement them for all retiring employees.

Earlier, the Pakistan government notified an increase in salaries and pensions of employees proposed in Budget 2024-25.

The adhoc relief allowance of government employees up till grade-16 increased by 25 per cent.

Similarly, the adhoc relief allowance of government officials from grade-17 to grade-22 was raised by 20pc.

Meanwhile, the division also notified a 15pc increase, proposed in the Budget 2024, in pensions of federal employees.