ISLAMABAD – To overhaul the pension system for former public sector employees, the Ministry of Finance has proposed a number of significant adjustments.
The recommendations include a change in the foundation for calculating pension, a reduction in the commutation formula, and adjustments in the period of pension entitlement for some groups of pensioners, while exempting defence and armed forces members from these modifications.
Instead than using the last drew pay as is currently done, the pension calculation under the proposed revisions would instead use the average of the last three years’ worth of salaries.
A reduction to 25% would be made to the commutation formula, which determines the lump sum payment upfront amount upon retirement, with the remaining 75% being paid in monthly installments over the following years. This is a change from the previous system, which was 35 percent at retirement and 65 percent beyond that.
Furthermore, as contrast to the current lifelong entitlement, the pension period for some groups of pensioners, such as daughters who are single, divorced, or widows, would be limited to ten years. A 20-year exemption would be granted to Shuhada families, and disabled sons and daughters would be eligible for lifetime pension benefits.
