ISLAMABAD: Prime Minister Anwaarul Haq Kakar-led caretaker Pakistan government is all set to make crucial changes to the pension rules affecting civil servants of the federal government.
The move is seen as a direct response to the IMF conditions. These reforms, outlined in a summary prepared by the Ministry of Finance, have far-reaching implications for the government employees, also concerning their retirement benefits.
Under the proposed changes, the pension for the federal government employees will no longer be calculated on the basis of their final salary. Instead, pensions will be determined by an average of the employee’s salary over the last three years of service. This change is expected to have far-reaching impact on the retirement benefits of civil servants.
In a significant move, the government is recommending the abolition of lifetime family pensions for retirees. Under the new scheme, eligible family members will receive pension payments for a period of 10 years upon the death of the pensioner. However, heirs of martyrs will enjoy an extension of their family pension period up to 20 years, with lifetime family pensions maintained for special children.
Multiple pensions restricted
As part of the broader pension reform plan, the government employees who secure a second job will be required to make a choice: they must opt between receiving a salary or their pension. This decision aims to curb the practice of retired employees receiving multiple pensions.
Inflation-linked pension hike
To address inflation concerns, the reform package proposes that pension increases be linked to the annual inflation rate. If inflation surpasses 10 percent, an additional ad-hoc relief will be granted based solely on the original pension amount, with the relief being withdrawn as inflation rates decrease.
The Ministry of Finance is keen to secure approval for these proposed reforms from the global lender.
This decision has sparked apprehension among the employees as it concerns retirement benefits.
