The federal government is considering increasing the salaries and pensions of its employees by up to 10-15 percent in the upcoming fiscal year’s budget.
The Ministry of Finance is proposing a 10 percent salary increase. However, various factors might necessitate an increase of up to 15 percent in the 2024-25 budget, as reported by The News.
The government is also reviewing car monetization allowances for senior officers, which could see increases of up to 25 percent. Currently, grade 20 officers receive Rs. 67,000, grade 21 officers Rs. 77,000, and grade 22 officers Rs. 87,000 per month for car monetization.
Pension reforms are a significant part of the budget agenda, including a proposed tax on pensions exceeding Rs. 100,000 per month. Different slabs for higher pensions may be introduced. Additionally, the budget might include an extension of the retirement age for public sector employees by up to five years.
Key pension reform proposals include:
- Gross pension to be based on 70 percent of the average salary over the last 36 months of service.
- An early retirement option after 25 years of service with a 3 percent annual penalty on the pension.
- Separate handling of pension increases from retirement calculations until further government review.
- Family pensions to be limited to 10 years, extended to 20 years for Shuhada (martyrs) pensions, and lifetime for disabled or special needs children.
- Option to commute up to 25 percent of the gross pension at retirement.
- Pensioners re-employed in public service can choose between their pension or salary, and those entitled to multiple pensions can opt for one.
These changes aim to address the financial needs of government employees while also implementing reforms to manage the pension system more effectively.
