Amendments proposed to pension rules

Multiple pensions to go; proposals to also discourage early retirement

ISLAMABAD: The Pay and Pension Commission (PPC), has proposed amendments in the pension scheme for existing pensioners and employees of the Government of Pakistan. The amendments are proposed in line with the increasing cost of pensions, which are expected to cross the Rs 1 trillion mark in the upcoming years.

Sources said that the PPC has proposed amendments to curtail future increase in pension costs, without compromising on the government’s pension philosophy.

Over the last 12 years, Pakistan’s federal pension budget allocation has gone up by 500%. 

Earlier this year, the government allocated Rs. 761 billion in pensions for federal employees, which was later reduced to Rs 654 billion. This includes military and civil pensions and an additional 10 billion for a proposed pension fund. The total pension expenditure that is estimated this year, is a whopping 25% more than the previous year. 

Following are the changes proposed to the pension structure for government employees.

Calculation of Gross pension

Under the new proposal, government employees shall be entitled to a gross pension, which is 70% of average pensionable emoluments (base salary) drawn during the last thirty-six months of service, prior to retirement.

This means that a person whose salary is Rs 100,000 in the last 3 years, will be entitled to Rs 70,000 in pension.

Early retirement penalties

A government employee may opt for early retirement after putting in 25 years of service; however the employee shall be liable to a penalty of 3% per year in gross pension, with effect from retiring year till the age of superannuation (actual retirement age).

Future increase 

Any increases in pension shall be granted on the pension calculated at the time of retirement. Each increase shall be maintained as a separate amount until the time the government decides to review and authorise any additional pensionary benefits.

This proposal is expected to cater to the issue of compounded pensions. The government, for the first time included future retirees in the receivers of the increment awarded in 2009. In the following years, the same act was repeated more than 6 times. The step compounded increments for retirees, leaving service after 2020 for up to 6 times. This caused the pension figures to balloon to the levels that they are currently at. 

Family pension

The document also proposes that a family’s pension, after the death or disentitlement of the guardian, shall only be admissible to remaining entitled family members for a maximum period of 10 years. Provided that in case of Shuhada pension, the maximum period for entitled family members will be 20 after the death or dis-entitlement of spouse;

In case of disabled/special children of a pensioner, the family pension shall remain admissible for life of such children.

Pension in case of re-employment/appointment after retirement

In an event where a pensioner of the federal government is re-employed/appointed in public service after retirement whether on regular/contract basis or whatsoever mode of employment, the pensioner shall have the option to retain either pension or to draw the salary of said employment during the currency of that employment.

Multiple pensions

In an event where a person becomes entitled to more than one pension, such person shall only be authorised to opt to draw one of the pensions.

Annual increase in pension

Annual increase in pension shall be granted as per formula (percentage of annual pension increase= percentage of consumer price index for that particular year; provided that annual increase in pension for that particular year shall not be more than 10%).  In events of annual inflation above 10%, the federal government may authorise adhoc relief for pensioners which shall stand abolished upon reduction of inflation to normal level.

Sources said that the ministry of defence has reportedly also shared details with the finance division on pension reforms and they recommended that no proposal should discriminate against armed forces personnel.

Special family pension should not be disturbed (as per PM’s assistance package) due to the prevailing sensitive environment, special protection to the families of in-service deceased/shuhada families needs to be given.

Shahzad Paracha
Shahzad Paracha
The writer is a member of Pakistan Today's Islamabad bureau. He can be reached at [email protected]

42 COMMENTS

  1. Family pension life time hony chay because man deaths k bad wife old age main kis k sahary zindagi guzary,Government ko in ka sochna chy thanks

  2. Reforms are needed in present pension scheme, as its liability for the government’s is becoming unsustainable.Ultimately government will have to introduce gratuity scheme to reduce ballooning financial liability for the government.However, by carrying out above amendments, government should not ignore welfare aspects of widows, orphans etc specifically daughters.

  3. All citizen of Pakistan must be entitled to get pension after retirement whether they r Govt employee or not. please refer Turkish system. in addition to it free medical facility be allowed. Basic problem is our institutes do not appropriate provision /proper future budget for their employees.

  4. All payroll employees are subject to collect there pension after certain amount of time.and once they retired no more job for them so the other can work as well and support there families.

  5. The Pay and Pension Commissions have been invariably headed by retired people from various organizations/departments. They take their pension and are re-employed on hefty salaries. It is surprising that they should be preaching what they are not practicing. There are scores of retired people from a certain government department who head various organisations after retirement and enjoy both high perks as well as pensions.

    Pensions for retired government employees are a universal phenomenon and each country has its own rules and regulations. Most of the people join government service because besides job security, it is pensionable. I wonder why every now and then the focus rests on expenditure being incurred on pensions. One reason could be that pensioners are a silent minority and they have no clout to influence the government’s opinion.

    Everyone knows where most of the country’s budget goes but none would dare mention it. And by the way why to distinguish between families of shuhada and others. Every government employee who dies while on government duty is a ‘shaheed’. Shahadat is not confined to only those who fight or wear uniform. This is an absolutely wrong concept of martyrdom. I sincerely hope that no stupidity will be enforced and that sanity will prevail.

  6. No pensions for MPAs, MNAs, Senators, Judges as they are already getting hafty salaries, they should handle themselves independently

  7. The new pension rules should apply on those who retire wef 01 July 2023.
    Old pensioners who retired prior to year 1999 with two pensions.They worked in second service on the PAY minus PENSION formula, receiving meagre salary.
    Family Pension should not be restricted to 10 years.

  8. استحصال کریں گے ، اگر یہ قانون منظور ہوا تو۔۔۔
    لیکن دوہری پنشن یا دوہری تنخواہ میں سے ایک لینا قانونی طور پر ٹھیک ہے۔ اور اگر شفاف چلیں تو افوج اور سویلینز دونوں کے لیے ایک جیسا قانون ہونا چاہیے!!!!!!!!

  9. I salute for this important issue focused by the govt and I believe that this should be implemented in true letter and spirit.this money came from the common man tax income which should be used for country development.not for increase of pensioners and not for their multiple pensions.
    our country should be stable first that is important to save the country regardless to fill the pockets of pensioners only.whe these people not take only money which could used for their survival only as they have no liabilities in old age and enjoying heavy pensions amount.and a common man is suffering due to unemployment.

  10. 1. Annual increase in pension is good along with Adhoc relief Allowance
    2. Opt for Pension or pay on re-enroll/ re-employment as well as discontinuation of multiple pensions is very right steps.
    3. One thing more may be addressed ie, Under the prevailing Rules of family pension in case of death of NoK (wife) the mother of an officer is entitled for family pension just Rs 700 PM which is totally not understood. Same may revised as a some %age of existing pension instead of fixed Rs 700.
    4. As per finance devision clarification, PM Asstt pkg is not comes under pension Rules, it is a separate pkg with it’s own Rules, same may not be disturbed.

  11. First of all stop corruption in all sectors. Only widows, teenage, disabled and special cases should be allowed. Increase shouldn’t be more than 5%.

  12. Not only pension of the armed forces should not be disturbed, pension of civil armed forces and police also should not be disturbed,ie all combatants who fight against enemies of the country their pension should not be disturbed, including two tiny pensions of the soldiers.

  13. – Same rules should be there for armed forces and civilians.
    – No retired person should be allowed to get another job in any govt sector. We have millions jobless and the influentials secure lucrative posts after retirement.

    For whole my life I served in private sector, paid huge amount in taxes without a single penny benefit/pension from govt of Pakistan. Don’t tell me that private employees earn more. Now there is not much difference in salaries of private and govt employees. The companies we work for remain in profit whereas all enterprises run by govt are white elephants.

    I am wondering why all govt institutions are always in loss but still pay medical, TA/DA, pensions etc. Is there a single govt institutions which is delivering ?

  14. Better solution is Defined Contribution scheme as initiated by KP Government, otherwise pension cost will eat away major part of the budget. Defence institutions may resist as their pensionable term is even less than other departments at lower ranks.

  15. سب بکواس ہے انسروس یہ کئ کئ اداروں کو چلا رہے ہوتے ہیں اور کرپشن کی تو انہوں نے حد کر دی ججوں جرنیلوں سیاستدانوں کی عیاشیاں بھی کم کریں ان کے پروٹوکول دیکھ لیں نگران وزیراعظم صاف چلی شفاف چلی پیرس کی سیر کرنے کیلئے بمع فیملی اسپیکر قومی اسمبلی اور سینیٹ چئیرمین کی لائف ٹائم پنشن ججوں جرنیلوں اور بیوروکریٹس ٹیکنوکریٹس کی مراعات ختم کریں سارا نزلہ کمزور پر ہی گراتے ہیں پاکستان کے رولز بنتے ہیں وہ صرف کمزور طبقے کیلئے اور جتنے ادارے بنائے گئے ہیں وہ بھی صرف کمزور طبقے کو دبانے کیلئے

  16. All this is a futile exercise. Why do we need to increase pensions and salaries? The reason is that we are unable to control inflation. So all sorts of wages are to be increased in proportion to the dearness. We have to concentrate on economic policy. There is much room for improvement in the economy if taken seriously.

  17. All government employees must protest why defense and armed forces not included in these changes,after 60years what we do after retirement, they are playing from our family, we all must take steps against these changes

  18. There should be one law for all employees whether they are uniform or ununiform employees. 2ndly To reduce the cost on pension, apply such laws on parliamentarians etc not on govt employee. It should be for future new comer not on employees having rendered 35 years services and at this stage is not acceptable by anyone. No increase is needed if price hike is stopped

  19. This is very injustice in this society of humanity because Family pension life time hony chaye not for only 10 years because ghar ky bary Father/Husband ky death ky bad jo pension wife ko milti hai wife old age main kis k sahary zindagi guzary gi agar unko koi beta ya koi sahara nahi hoga koi to this is injustice from this amendment not good for society ,Government ko in ka sochna chaeye inko to benefits diye jaen ur bhi bajae 10 years krny ky thanks 🙏

  20. Government seems to committed to punish the the wife of government empoy for her offence of being alive after the death of her husband ten year before.

  21. Government seems to committed to punish the the wife of government empoy for her offence of being alive after the death of her husband ten year before.

  22. First asses the perks etc n pensions of judges,mna,map,top ranking generals .Then go for pension of orphans n widows

  23. کیا سارا مالی بوجھ صرف سکیل 1 تا 16 کے ملازمین کی پنشن کا ہے۔؟ سول و ملٹری بیوروکریسی اور ججوں کی پنش اور ہوشربا بعداز ریٹائرمنٹ مراعات کا قومی خزانے پر کوئی
    بوجھ نہیں۔۔؟
    اور پھر یہ وزیروں، مشیروں، ایم این اے، ایم پی اے اور سینٹروں کی تنخواہوں، مراعات اور پروٹوکول کا بھی کوئی بوجھ نہیں؟
    یہ پنشن کے مالی بوجھ میں کمی اور بچت کے نام پر جب بھی پنشن اصلاحات کے نام کی تلوار چلے گی تو غریب اور چھوٹے ملازمین کی پنشن پر ہی چلے گی۔
    یہ سراسر ظلم و ستم ہے۔
    پہلے یہ سنا تھا کہ یکم جولائی 2018 سے اور آئندہ بھرتی ہونے والے ملازمین کے لیے کنٹریبیوٹری پنشن متعارف کروائی جارہی تھی تاہم انکی تنخواہ موجودہ ملازمین کی بنسبت زیادہ رکھنے کی تجویز تھی جو کہ معقول معلوم ہوتی تھی کیونکہ اس سے نہ موجودہ ملازمین کے حقوق متاثر ہوتے اور نہ نئے ملازمین کے۔۔۔اور اس سے وقت کے ساتھ ساتھ قومی خزانے پر بوجھ بھی کم ہو جاتا۔۔۔
    برائے مہربانی کسی ایسی تجویز پر عمل کیا جائے نہ کے چھوٹے ملازمین کا مالی قتل کیا جائے اور ان کے خاندانوں کا مستقبل تباہ کیا جائے۔۔۔کیونکہ یہ ملازمین اس پنشن کی آس پر ساری زندگی نوکری کرتے ہیں اور ان کی خاندانوں کا یہی کل اثاثہ ہوتا ہے۔۔

  24. براہ مہربانی اگر واقعی گورنمنٹ سرونٹ کو مارنا ہی مقصود ہے،تو پھر پے اینڈ پینشن کمیٹی کو یہ کام ضرور
    کرنے چاہئیے،،،1۔۔۔قانون سازی کے وقت تنخواہ کم از کم بھارت کے برابر ہو،،2۔۔قانون کا نفاذ آج سے بھرتی نئے ملازمین سے کریں ،پرانے ملازمین کے ساتھ دھوکہ تصور ہوگا،،3۔۔۔ فیملی پینشن کی آخری حد 10 سال کی بجائے پینشن کو بیوہ کے لئے تا حیات آدھی کرلے،،فوج،سول،صوبائی اور فیڈرل پنشین ایک لیول پے لائیں،،،
    پینشن کی جگہ ٹیکس نظام بہتر کریں
    زرعی ٹیکس لگائیں
    سرکاری اخراجات گٹھائیں
    شکریہ

  25. Pension reforms means Gunda tax of government which is snatched from employees by previous political government.
    *. 33.5 is deducted made every month from the salary of employees pension contribution of government employees.
    *. There should be no discrimination between the Government servent and other.
    * Discrimination is against the Constitution of Pakistan.

  26. i think its good step.
    GOP must changes in pension system. pension directly paid from GOVT fund it leads shortage of funds and more expinditures.
    IMF we Love you😄😄

  27. I think this step not more effective for economy of Pakistan.
    Reforms in required in the Financial Assistance field.
    Think if death of employee e.g (in BPS-06) before one month of his/her superannuation. benefits amount to her family (Financial Assistance 1900000) (Leave encashment estimated 270000) (Four month salary estimated 200000) (17/A) (OSD post) (Funeral Grant), how much huge burden on economy. (Total estimated cost 24 Lac) 17/A Addition, OSD addition after OSD Pension extra.
    In my suggestion if only one benefit OSD post active direct from Account Office with in the death of one month of deceased without adopting any long procedure (Finance Department approval).
    In this way family of deceased not suffer and not burden on economy

  28. These pension rules have been rejected by law division government of Pakistan as these are contradictory to the Constitution of Pakistan and Human Rights specially the concept of equality has been ignored broutly in these rules. I don’t know why such foolish and kidding rules are made and submitted for approval.

  29. There should be no discrimination among any government employee and armed force personnals and they should be treated with principle of equality in respect of pension and other financial matters.
    Increase in pension should be made as per formulas applied to pension of regular employees even retired pensioners entitled for more increase in pension as they not receive any other allowance like convenience allowance, utility allowance, annual increments, bonus etc.

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