• Multiple emoluments abolished, pension to be calculated on average of salary drawn over last two years of service
• Future benefits curtailed; penalties for voluntary retirement on the cards
ISLAMABAD: The government on Wednesday notified major reforms to the country’s pension system, abolishing multiple pensions and shifting future pensionable benefit calculations to an average of the salaries drawn over the last two years of service, instead of the last pay drawn before retirement.
In a series of notifications issued on the first day of 2025, the Ministry of Finance said these changes had been approved on the recommendations of the Pay and Pension Commission-2020 (PPC) and come into force with immediate effect.
These were announced as part of the 2024-25 federal budget and approved by the Economic Coordination Committee (ECC) of the Cabinet in June last year for implementation with effect from July 1, 2024, but were notified after six months.
According to the first notification, henceforth “pension shall be calculated on the basis of average of pensionable emoluments drawn during last 24 months of service prior to retirement”. This puts new pensioners at a disadvantage, who were earlier entitled to such benefits on the basis of the last pay drawn on retirement.
In the second order, the finance ministry said that “in the event where a person becomes entitled to more than one pension, such [a] person shall only be authorised to opt to draw one of the pensions”. This is subject to the provision that “where a federal government employee becomes entitled to a pension, such federal government employee shall be not eligible to receive such pensions”.
In addition, “the in-service/pensioner spouse shall be eligible for pension of his/her spouse in addition to his/her own pay/pension”. This decision was announced in parliament by then-finance minister Ishaq Dar as part of the 2023-24 budget, but remained unimplemented due to resistance from powerful “pensioners drawing double and multiple pensions”, an official said.
