Reforms limit pension for heirs to 10 years

Approving the pension reforms, the government has imposed a ban on securing multiple pensions and limited the provision of pensions for family members to 10 years.

Under the reforms, the government would calculate the pension according to the 70% salary average drawn during the last 24 months of service prior to retirement. 

A summary was approved by the Economic Council Committee (ECC), under the chairmanship of the Finance Czar, Muhammad Aurangzeb.

The reforms were made under the terms of reference of the Pay Pension Commission-2020 (PPC2020), allowing the commission to review the pension scheme as per requirement. 

The authorities presented the recommendations in light of PPC 2020, as they believed that the burden of pensions was increasing day by day on the national exchequer. 

The summary proposed by the Ministry of Finance, seeking amendment in Paragraph three, stated that the pension fund may be established by utilising the savings expected to come from the reforms proposed.

A federal government employee would be eligible for a pension after 25 years of service, however, the employee shall be liable to a flat reduction rate of 3% per year in gross pension based on the number of months from the date of retirement to the date of superannuation. 

According to the reform, such flat reduction in gross pension shall be capped at 20 pc. 

Special family pension, after the death of ineligibility of the entitled employee's family, would allow to get a pension for 25 years. 

In the case of disabled children of a pensioner, the special family pension would remain admissible for the life of such children.

The rate of such pension for eligible recipients is enhanced to 50% of the last drawn pension.

The annual increase in pensions would be granted at 80% of average inflation for the last two years.