The federal government is considering reducing the retirement age for its employees from 60 to 55.
Sources reveal that Prime Minister Shehbaz Sharif has reviewed this proposal but has not yet endorsed it. As discussions continue, no decision has been finalized. Reducing the retirement age would specifically target civil servants, potentially leading to early retirement for many bureaucrats. Ministry of Finance sources express considerable resistance to this change within the bureaucracy.
Proposals to revise the long-frozen Federal Secretariat Allowance, which has not been updated for over a decade, are also considered.
The Ministry of Finance is evaluating the IMF’s suggestion to enrol all serving civil servants in the Contributory Pension Scheme, aligning it with the terms for recruits. This scheme currently applies only to new hires.
Read: Finance Minister Proposes Retirement Age Increase and Pension Restructuring
The Finance Ministry suggested that pensions might increase by 80%, considering inflation data from the last two years. The government has approved a 15% increase in pensions for this fiscal year. This adjustment is part of broader efforts to manage the growing pension burden, which has significantly strained the national budget. The budget for this year allocates Rs 1,014 billion for pensions.
The initiative to link pension increases to inflation originated from the Pay and Pension Commission 2020. The State Bank of Pakistan will provide the inflation data for these adjustments.
The Sindh cabinet has moved forward with the Sindh Defined Contributory Pension Scheme 2024. A new subsection has been added to the Sindh Civil Servant Act 1973. Under this amendment, civil servants appointed after the enactment of the Sindh Civil Servant (Amendment) Act, 2024, will join a Defined Contribution Pension Scheme. They will receive contributions from themselves and the government rather than traditional pensions and gratuities.
