The federal government has eliminated double pensions for employees to comply with conditions set by the International Monetary Fund (IMF), World Bank, and other lenders.
Pensions will now be calculated based on the average salary of the last 24 months of service, replacing the previous formula that used salaries from the last 30 years.
Under the revised policy, individuals eligible for multiple pensions must choose one. However, pensioners or in-service spouses will still receive their partner’s pension in addition to their own.
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Future pension increases will follow a new methodology, calculated as the gross pension minus the commuted portion at retirement. These increments will remain separate from the baseline pension until reviewed every three years.
Annual compounding of pensions has been discontinued, with increases now treated as one-time adjustments, similar to ad-hoc salary increments.
The government has allocated Rs. 1.014 trillion for pensions in the current fiscal year, with 66% earmarked for the Armed Forces. Notifications from the Regulation Wing of the Ministry of Finance have been issued to implement these changes.
Officials stress that these reforms are essential to curb growing pension liabilities, which significantly contribute to the nation’s increasing debt burden.
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