Govt Officials to Get Massive Salary and Pension Increase

The government is planning to increase salaries for public sector employees by 10% to 15% in the 2024-25 budget. This comes at a time when the government wants to secure a $6 billion deal with the International Monetary Fund (IMF), which requires strict financial measures like raising more tax revenue and controlling spending.

The government is considering setting a tax revenue target of over Rs12.5 trillion that will allow them to raise salaries and pension. The Ministry of Finance suggests a 10% salary increase, but there is pressure to raise by 12.5% or even 15%.

There are also plans to increase the monthly car allowance for higher-grade officers (grades 20, 21, and 22) by 20% to 25%. Currently, these officers receive monetization on cars between Rs. 67,000 and Rs. 87,000 per month. This allowance hasn’t changed since 2012 and now there is pressure to increase it keeping in view the inflation.

The government is also looking at pension reforms. One idea is to tax pensions over Rs100,000 per month, with different rates for higher pensions. They might also raise the retirement age by two to five years.

Federal employees could get a pension based on 70% of their average salary over their last three years of work. Early retirement might be allowed with a penalty of 3% per year before the normal retirement age.

Pension increases would be based on the pension at the time of retirement and kept separate until reviewed by the government. Family pensions might be limited to 10 years, except for cases involving Shuhada Pensions, which could extend to 20 years. Disabled or special needs children of pensioners might receive pensions for life.

Employees might be allowed to take up to 25% of their pension as a lump sum at retirement. Pensioners who return to public service might have to choose between their pension or their salary from the new job. Those eligible for multiple pensions might have to pick one.

These changes are part of the government’s effort to manage the economy better, deal with inflation, and meet IMF requirements.

Follow INCPAK on Facebook / X / Instagram  for updates.