The federal government is considering abolishing the Basic Pay Scales (BPS) for public sector employees, initially starting with non-gazetted staff, and replacing them with a contract-based workforce as part of broader public-sector reforms to reduce the long-term financial burden on the national budget.Â
Dawn reported that the Ministry of Finance has discussed these potential changes with multilateral agencies, including the World Bank, and may seek both technical and financial support for their rollout.
This move would reduce pension liabilities, which currently exceed Rs1 trillion, and shift new hires to contract terms with performance-based exits.
Under these reforms, newly inducted staff would receive fixed salaries with limited long-term benefits, such as medical coverage only through insurance.
Current officers recruited through Central Superior Service (CSS) and Provincial Service Commissions (PSCs) would retain their existing rights, while future hires would face performance-based contracts, potentially subject to termination with notice periods of three to six months.
The newly implemented pension reforms have already introduced contributory pension schemes for future public sector recruits, including military personnel, aiming to control the rapidly rising pension bill.
This year’s budget allocated over Rs1 trillion for pensions, with Rs665 billion for military pensions and Rs220 billion for civil pensions.
If implemented across federal ministries and public-sector corporations, the shift away from BPS could save an estimated Rs 35-40 billion annually, easing the growing strain of benefits, medical coverage, and allowances associated with the traditional BPS framework.
