Government of Pakistan has finalized reforms aimed at streamlining pension disbursements, notably limiting family pensions to a duration of 10 years and discontinuing multiple pension payments.
Under the new regulations, pensions will be calculated based on 70% of the average salary from the last 24 months preceding retirement. This measure aims to manage escalating costs associated with pension payments, which have become increasingly unsustainable.
The summary outlining these reforms has been circulated for feedback among key ministries, including the Ministry of Defence, Establishment Division, and Ministry of Interior.
Finance Minister’s recent chairmanship oversaw the approval of these reforms, emphasizing pensions as a vital benefit for employees and their families. However, the growing financial burden necessitated these adjustments.
The Pay and Pension Commission of 2020, tasked with reviewing the pension system, recommended amendments to control future pension expenditures. These proposals were also highlighted during the 2023-24 budget presentation, aiming to ensure the financial sustainability of pension schemes for current and future retirees.