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Islamabad, Pakistan – In a bid to reduce the increasing burden of pensions, the Ministry of Finance has introduced significant amendments to the pension scheme. The changes, which were announced through three separate office memoranda, aim to streamline the pension system and ensure its sustainability.
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According to the notifications, the duration of family pension after the death of retired employees has been fixed at 10 years, while the duration of special family pension has been fixed at 25 years. Additionally, children of deceased retired employees who are disabled will be eligible for a lifetime pension.
The amendments also introduce new rules for voluntary retirement, requiring employees to have completed 25 years of service to be eligible. Those who retire before completing 25 years of service will face an annual reduction of 3% in their pension, based on the remaining period until their retirement date or age.
The Ministry of Finance stated that the federal government’s pension bill has reached Rs. 1014 billion this year, with estimates suggesting it will increase to Rs. 1166 billion next year. By 2026-27, the pension payment bill is expected to reach Rs. 1341 billion. Last year, Rs. 821 billion was spent on pension payments to retired employees.
The amendments are based on the recommendations of the Pay and Pension Commission 2020 and aim to ensure the long-term sustainability of the pension system.