The federal government of Pakistan has released details of proposed amendments to the pension scheme for public employees in the fiscal year 2024-25 budget, highlighting a strategic reevaluation of pension disbursements amid ongoing financial adjustments.
According to sources, the proposed pension scheme is designed to adjust pensions annually based on 80% of the average inflation over the last two years. Furthermore, public servants will receive a gross pension equivalent to 70% of their average salary from the final two years of their service upon retirement. A notable change in the scheme is that an employee will be eligible to receive a pension or a salary upon retirement, but not both.
The amendments suggest that public employees may opt for voluntary retirement after completing 25 years of service, with the pension increasing annually by the two-year average inflation rate. Early retirement before age 60 could reduce pension payments, varying between 3% and 20% annually.
These pension scheme modifications have been formulated in consultation with the Ministries of Interior, Defense, and Finance. These modifications specify conditions for re-employment post-retirement, indicating that re-employed retirees will receive compensation from only one department. In the case of married couples, if one spouse passes away, the surviving spouse will continue to receive both pensions.
Additionally, the policy extends pension benefits to the families of deceased pensioners for up to ten years after death. In cases of accidental retirement, the retiree is entitled to receive a pension until 60. If a pensioner dies, their family is eligible to receive pension benefits for up to 25 years, and children with physical or mental disabilities are entitled to a lifetime pension.
Military personnel opting for voluntary retirement from the civil armed forces will also have their pensions subjected to an annual decrement ranging from 3% to 20%. The proposed policy also outlines that upon retirement, an employee should receive a pension based on 70% of the average of the last two years of basic salary after completing 25 years of service. The annual increment in pension will be determined based on the amount received at the time of retirement.
