The government is considering a 10 to 15% salary increase for public sector employees in the 2024-25 budget. To secure a $6 billion deal with the IMF under the Extended Fund Facility (EFF), the government must implement strict fiscal measures, including raising revenues from the Federal Board of Revenue (FBR) and non-tax sources while controlling expenditures.
Officials are considering setting the FBR tax revenue target at over Rs12.5 trillion for the coming budget. The Ministry of Finance initially aimed to raise salaries by 10%. However, pressures might lead to an adjustment to 12.5% or 15%.
Pension Reforms and Car Monetization
Another proposal under review involves increasing car monetization for higher grade officers (grades 20, 21, and 22) by 20 to 25%. Grade 20 officers receive Rs67,000 per month, grade 21 officers Rs77,000, and grade 22 officers Rs87,000. This increase is being considered due to inflationary pressures.
Top officials confirmed to The News that pension reforms will be introduced in the 2024-25 budget. One proposal includes taxing over Rs100,000 monthly and introducing different slabs for higher-bracket pensioners.
“We may propose raising the age limit of public sector employees by two to five years along with a comprehensive pension reform package,” top officials said.
Federal employees will be entitled to a gross pension based on 70% of their average pensionable emoluments from the last 36 months of service.
Employees can opt for early retirement after 25 years of service but will face a 3% per year reduction in their gross pension until the age of superannuation.
Pension increases will be granted based on the pension calculated at retirement and maintained separately until reviewed by the government.
After the death or disentitlement of the spouse, a family pension is admissible to remaining family members for a maximum of 10 years. In the case of Shuhada Pension, the period extends to 20 years. For disabled or special children, the family pension remains for life.
Federal employees may commute up to 25% of their gross pension at retirement based on federal government terms.
If a federal pensioner is re-employed in public service, they can retain their pension or draw the new employment salary. If entitled to more than one pension, the pensioner can draw one.
