MINISTRY OF FINANCE ANNOUNCES PENSION REFORMS TO CURB RISING BURDEN

In a bid to address the escalating pension burden, the Ministry of Finance has introduced substantial amendments to the pension scheme, as recommended by the Pay and Pension Commission 2020. The reforms aim to streamline pension payments and reduce the financial strain on the government.

KEY AMENDMENTS:

1. Family Pension: The period for family pension has been fixed at 10 years after the death of a retired employee. However, in cases where the child of the deceased is disabled, they will receive a pension for life.
2. Special Family Pension: The period for special family pension has been set at 25 years. If the spouse of the pensioner passes away or becomes incapacitated, family members will receive a pension for up to 25 years. In cases where the son or daughter is disabled, the pension will be provided for life.
3. Pension Rate Increase: The pension rate has been increased by 50% for existing pensioners across all ranks of the Forces and Civil Armed Forces. This pension can be transferred to eligible heirs.
4. Voluntary Retirement Penalty: Employees who opt for voluntary retirement will face a deduction in their pension. The monthly gross pension will be reduced by 3% for remaining service up to the age of 60 years, subject to an upper limit of 20%.

PENSION EXPENDITURE PROJECTIONS:

• Current year: 1014 billion rupees
• Next year: 1166 billion rupees
• 2026-27: 1341 billion rupees

IMPLEMENTATION:

A formal notification has been issued, and an Office Memorandum (OM) has been sent to all Ministries and Divisions for immediate implementation of these amendments.