The government is introducing pension reforms aimed at reducing the financial burden

• Family of a deceased pensioner is entitled to receive pensions for 10 years.
• Employees, in case of accidental retirement, to receive pensions until the age of 60.
• Workers who leave voluntarily face annual pension cuts of 3-20%.

ISLAMABAD: After announcing a 15% increase in post-retirement funds for employees in the 25th budget, the federal government has unveiled its pension reforms aimed at starting a gradual reduction in pension liabilities.

The new amendments were introduced by the federal government to address the growing burden on the national exchequer due to pensions for eligible employees and their families.

The documents received from Geo Newsof the revised pension system showed recent amendments approved and notified by the federal government, covering different categories of post-retirement benefits and existing and future pension increase plans.

sources said Geo News that the amendments were formulated in consultation with the Ministries of Finance, Defense and Interior.

Federal government employees are entitled to a gross pension based on 70% of the average pensionable earnings paid during the last 24 months of service before retirement.

In the light of the proposed amendments, the pensioner will be able to retain either pension or receive salary from the said employment in case of re-appointment in the public service on regular or contractual basis after retirement at the age of 60 years.

Regular, special family pension

The Regular Family Pension, after the death or ineligibility of the spouse, will be admissible to the remaining eligible family members for a maximum period of 10 years, the document said.

In the case of eligible children, the Regular Family Pension remains admissible for 10 years or until the age of 21, whichever is later.

Civil servants falling under the accidental retirement category would receive pensions up to the age of 60.

The Special Family Pension, after the death or ineligibility of the spouse/first recipient, will be admissible to the remaining eligible family members for 25 years after the death or ineligibility of the spouse/first recipient.

In the case of disabled or special children of a pensioner, the Special Family Pension remains admissible for the life of these children.

Voluntary withdrawal penalties

A federal government employee can opt for retirement after 25 years of service. However, the employee is subject to a flat rate reduction of 3% per annum in the gross pension based on the number of completed months from the date of retirement to the date of retirement.

This flat-rate reduction of the gross pension is limited to 20%.

Provided that in cases of Armed Forces and Civilian Armed Forces, voluntary retirement sanctions will be applicable only if retirement is requested and granted before the scheduled Rating Service, the document said.

According to the proposals drawn up by the Economic Coordination Committee (ECC) of the federal cabinet, the government will set up a Pension Fund and frame rules for its operation.

In addition, a Defined Contribution Scheme may also be introduced to the federal government for new entrants next month.