Pakistan government has ‘introduced’ pension reforms for retired employees, fulfilling a key demand from the International Monetary Fund, according to a notification issued by the finance ministry.
As of the new year, a ban has been imposed on government officials and employees from receiving double pensions. A notification has been issued to formalise the changes.
The new system will automatically include pension increments through computerised methods, eliminating manual procedures. This also means that the pension records of over 300,000 employees have been computerised.
In addition to this, the government has introduced several reforms to streamline pension calculations. With these changes, important government officials will only be eligible for one pension.
The implementation of these reforms is expected to save billions from the national treasury annually.
The new rules specify that annual pension increments will apply to the first pension only, and future pensions will be calculated based on the last 24 months of service.
The Pay and Pension Commission will review the basic pension every three years. The Ministry of Finance has immediately implemented the recommendations of the 2020 Pay and Pension Commission.
Finance Minister Muhammad Aurangzeb previously announced that public sector employees hired from the next fiscal year onward will no longer be eligible for state-funded pensions upon retirement as part of significant pension reforms.
Under the new rules, retired employees will not be entitled to both a salary and pension simultaneously if they rejoin any organization.
The reforms specify that retirees will only receive a pension, and if they resume employment, they will forfeit their pension for life.
