The government proposes pension modifications in an effort to lessen financial load.

The government of Pakistan has proposed significant modifications to the pension system in an effort to alleviate the financial burden on the country’s economy ¹ ² ³. The proposed changes aim to reduce the financial load of pension payments, which are expected to exceed Rs 1 trillion in the coming years ³.

The key modifications include calculating pensions based on the average of the last three years’ drawn salary, reducing the commutation formula to 25%, and limiting pension entitlement for certain categories of retirees ² ³. Additionally, the proposal suggests indexing pension increases with the Consumer Price Index (CPI) and introducing penalties for early retirement ² ³.

The changes also aim to transition the pension system to a defined contributory model, where expenses will no longer be borne by the government ². Federal government employees will be entitled to a gross pension based on 70% of average pensionable emoluments drawn during the last 36 months of service before retirement ¹ ² ³.

The proposal also introduces the option for federal government employees to commute up to 25% of their gross pension at the time of retirement ². Family pension entitlements will be limited to a maximum of 10 years after the death or disqualification of a spouse, with exceptions for Shuhada families and disabled or special children ² ³.

The proposed modifications are expected to significantly impact the pension landscape for public sector employees in Pakistan ². The government’s efforts to reform the pension system aim to reduce the financial burden and ensure sustainability for future generations ³.