Govt introduces intense pension reforms for retired employees

ISLAMABAD: The Pakistan government announced intense pension reforms for retired employees to keep in check the yearly pension bill. According to the new regulations, a retired employee cannot draw both a salary and a pension at the same time if she/he resumes work in any other organization.

This means a retired employee will receive only the pension; if he/she works anywhere, his/her pension will extinguish for life. But if the spouse of a retired employee has work or is employed, he/she may continue receiving the pension until the spouse retires.

The pension should be determined based on the average salary of the final 2 years of employment, which is expected to lead to a cutback in the payouts of pensions. And again, an annual increase in pensions will be made, determined by the average salary, further slashing expenditures on pension bills.

These reforms, developed upon the recommendations of the Pay and Pension Commission, have been communicated to the IMF. A formal notification has been issued by the Ministry recommending implementation of these reforms to all retiring employees.

Earlier, the Pakistan government notified commencement of hike in salaries and pensions for employees proposed in the Budget 2024-25. The ad hoc relief allowance for government employees up till grade-16 has increased by 25 percent, while the rate for government officials from grade-17 to grade-22 has increased by 20 percent.

In addition, a raise in pensions of federal employees by 15 percent was proposed in Budget 2024.