Government of Pakistan Finance Division - Future Increase Methodology in Pension
The Finance Division of the Government of Pakistan has issued an important Office Memorandum detailing the methodology for future increases in pensions, effective from January 1, 2025. This memorandum follows the recommendations made by the Pay and Pension Commission-2020 and aims to provide clarity and consistency in the pension adjustment process for government employees and retirees.
Key Highlights of the Office Memorandum
1. Baseline Pension Definition
The memorandum defines the baseline pension as the net pension calculated at the time of retirement. This figure is determined by subtracting the commuted portion of the pension from the gross pension. Establishing a clear baseline is crucial for determining future pension increases.
2. Increase in Pension
Any future increase in pensions will be granted based on this baseline pension. This method ensures that adjustments are made consistently and transparently, allowing pensioners to understand how their benefits will evolve over time.
3. Separate Accounting for Each Increase
To maintain clarity, each increase in pension will be recorded as a separate amount. This means that until the Federal Government reviews and authorizes any additional pensionary benefits, each increment will remain distinct. This approach helps in tracking the total pension benefits received by each retiree.
4. Review of Baseline Pension
The Pay and Pension Committee will review the baseline pension every three years. This regular review process is intended to ensure that pensions remain relevant and adequate in light of inflation and changes in the economic landscape.
Additional Provisions
The memorandum includes important provisions that apply to existing pensioners:
- The current pension of existing pensioners, as of the date of issuance of this memorandum, will be considered the baseline pension.
- Restored commuted portions of the pension will also be included in the baseline pension once they are restored.
Implementation of the New Methodology
The existing instructions regarding pension increases have been amended to reflect the new methodology outlined in this office memorandum. This change is effective immediately, ensuring that all relevant parties are informed and that the new process can be implemented without delay.
Contact Information
For any inquiries regarding this memorandum, pensioners and interested parties can reach out to:
Nayab Sayyed
Deputy Secretary (R-III)
Phone: 051-9245839
Conclusion
This memorandum represents a significant step in enhancing the pension system for government employees in Pakistan. By establishing a clear methodology for future increases, the Finance Division aims to provide greater financial security and transparency for retirees. Stakeholders are encouraged to familiarize themselves with these changes and stay updated on any further developments.
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