Punjab abolishes pension system for new employees

LAHORE: To ease the financial burden on the public exchequer, the Punjab government has decided to give recruits a lump-sum pay package instead of a basic pay scale.

These steps are in part due to a major policy shift by the government to cut pension liabilities.

A latest notification has decided that the policy would apply only to recruits and the ones who were appointed based on the 2018 law.

The new decision is part of a broader strategy that aims to minimize the expenses incurred by the provincial government regarding pensions.

To give this change its due legal form, the Punjab government has issued a new ordinance, entitled the “Punjab Regularization of Service Cancellation Ordinance 2025,” which shall come into effect from October 31, 2025. This ordinance has already been assented to by the Governor of Punjab and published in the official Gazette.

With this ordinance in place, the 2018 permanent employment law is now officially cancelled.

Additionally, the new system does away with pensions for new employees, marking one of the most dramatic changes in the handling of its staff.