Pakistan Government has introduced significant changes to pension policy to address rising pension costs. Finance Ministry issued these changes through three separate memoranda. Amendments aim to ease the financial strain on federal government while ensuring support for retired employees and their families.
New policy fixes the period for receiving family pension after a retired employee’s death at 10 years. The duration for Special Family Pension has been extended to 25 years. Additionally, a child of a deceased employee who has a disability will now receive a pension for life.
Policy also revises conditions for voluntary retirement. Employees can now opt for early retirement only if they have completed at least 25 years of service. Those who retire early will see their salary after retirement reduced by 3% for every year they retire before official retirement age.
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These changes follow recommendations from Pay and Pension Commission 2020. Government spent Rs821 billion on retired funds last year, and this year’s it costs have risen to over Rs1 trillion. By 2026-27, these expenses expects to reach Rs1.341 trillion.
Additionally, government introduced Contributory Pension Fund Scheme for new government employees. This scheme began on July 1 for civil servants and will start on July 1, 2025, for employees paid from defense budget. Under this scheme, new recruits will contribute 10% of their basic salary to fund, while federal government will contribute 20%.