ISLAMABAD – The government of Pakistan implemented new reforms to calculate the pensions of public sector employees.
Under new changes, pensions will be calculated based on the average salary over the last 24 months of service, ending the previous system that used the final salary to calculate retirement benefits.
Sharif-led government made changes to create a more equitable pension system by accounting for an employee’s performance and salary progression over the last two years of their career, rather than focusing on often inflated final-year salary.
The government believes this will ensure a more sustainable and fair pension scheme, with an emphasis on long-term financial stability.
Employees will no longer be allowed to receive multiple pensions, except for those opting for voluntary retirement, who will be exempt from the new calculation method. The reform also includes the provision that salary increments in the final year of service will no longer be included in the pension calculation.
Meanwhile, family pensions will now be based on net pension values rather than gross amounts under revised rules. These reforms aim to streamline the pension process.
IMF raised concerns over Pakistan’s growing pension burden, with some retirees receiving pensions over Rs 1.6 million. Last budget proposes Rs 1,014 billion for pensions, with a 15% increase requiring an additional Rs 122 billion.
IMF was particularly concerned about the issue of some retirees drawing multiple pensions.
Pakistani govt ends multiple pensions, limits family payouts amid major reforms
