The Pay and Pension Commission (PPC) brings a change in the pension scheme for existing pensioners and employees of the Government of Pakistan. They changed the increasing cost of pensions, which are expected to cross the Rs 1 trillion mark in the upcoming years. Over the last 12 years, The pensions of Federal employees budget allocation has gone up by 500%. Firstly, the government allocated Rs. 761 billion in pensions for federal employees. After this, they reduced to Rs 654 billion. The total pension expenditure that is estimated this year, is a whopping 25% more than the previous year. The government made the following changes to the pension structure for government employees.
Calculation of Gross pension
Under the new proposal, government employees shall be entitled to a gross pension, which is 70% of the average pensionable emoluments (base salary) drawn during the last thirty-six months of service, prior to retirement.
Early retirement penalties
A government employee may opt for early retirement after putting in 25 years of service; however, the employee shall be liable to a penalty of 3% per year in gross pension, with effect from the retiring year till the age of superannuation (actual retirement age).
Family pension
The family’s pension, after the death or disentitlement of the guardian, shall only be given to remaining entitled family members for a maximum period of 10 years. In the case of Shuhada pension, the maximum period for entitled family members will be 20 after the death or disentitlement of the spouse.
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Multiple pensions
In an event where a person becomes entitled to more than one pension, such person shall only be authorized to opt to draw one of the pensions.
Annual Increase in Pension
Annual increase in pension shall be granted as per formula (percentage of annual pension increase percentage of consumer price index for that particular year; provided that annual increase in pension for that particular year shall not be more than 10%).
