Govt to launch major change in pension policy for retired public sector employees

ISLAMABAD: The Pakistani government is contemplating a significant change to its pension policy, potentially eliminating lump sum pension increases for retired public sector employees, the sources said.

Instead, pensions may be adjusted based on inflation data from the past two years, with a proposed 80% increase.

This move aims to curb the growing financial burden of pensions on the national budget, which allocated Rs 1,014 billion for pensions in the current fiscal year. The government seeks to control inflation and reduce it to single digits in the next fiscal year.

The new approach, suggested by the Pay and Pension Commission 2020, involves linking pension increases to inflation data provided by the State Bank of Pakistan.

This change is part of broader efforts to reform the pension system, including recent notifications issued by the Ministry of Finance.

Earlier, In a major reform, the finance ministry issued the office order regarding three key amendments to the pension rules on the recommendation of the Pay and Pension Commission 2020.

According to the documents, the federal government has limited the family pension to 10 years after the death of the retired employee whereas if the pensioner dies, only legal heirs will be eligible to receive the pension transfer, and providing lifelong pensions for disabled children of deceased pensioners.