Government Officials Likely to Receive 10-15% Salary and Pension Increase

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ISLAMABAD: The government is exploring various proposals to increase salaries by 10 to 15% for public sector employees in the upcoming 2024-25 budget.

With the government's aim to strike a deal with the International Monetary Fund (IMF) under the Extended Fund Facility (EFF) amounting to approximately $6 billion, it must demonstrate political will by implementing stringent fiscal measures. These measures include increasing both Federal Board of Revenue (FBR) tax revenues and non-tax revenues while also controlling expenditures.

The government is contemplating setting the FBR tax revenue target at over Rs12.5 trillion in the forthcoming budget. Regarding salaries, the Ministry of Finance initially proposed a 10% increase, but there could be pressure to raise it to 12.5% or even 15% due to various factors.

Another proposal under review is to increase car monetization for higher-grade officers (grades 20, 21, and 22) by 20 to 25%.

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Currently, grade 20 officers receive Rs67,000 per month, grade 21 officers Rs77,000 per month, and grade 22 officers Rs87,000 per month for car monetization. There's consideration to increase these amounts in line with inflationary pressures, as they haven't been adjusted since the policy's inception in 2012.

Official sources confirmed that pension reforms are set to be introduced in the 2024-25 budget. There's a proposal to impose taxes on pensioners receiving over Rs100,000 per month, with different tax slabs likely for higher-bracket pensioners.

The government may also propose increasing the age limit for public sector employees by two or five years, along with comprehensive pension reforms.

According to proposed changes, federal government employees would be entitled to a gross pension based on 70% of their average pensionable emoluments drawn during the last 36 months of service before retirement.

Employees may opt for early retirement after 25 years of service, subject to a penalty of 3% per year reduction in gross pension until the age of superannuation.

Pension increases would be granted based on the pension calculated at the time of retirement, with each increase maintained separately until the government decides to review and authorize additional pensionary benefits.

Family pension would be admissible for a maximum of 10 years after the death or disentitlement of the spouse, while in the case of Shuhada Pension, it could be provided for up to 20 years. Additionally, in the case of disabled/special children of a pensioner, a family pension might be admissible for the life of such children.

Federal government employees may have the option to commute a maximum of 25% of their Gross Pension at the time of retirement, subject to prescribed terms and conditions.

If a federal government pensioner is re-employed or appointed in public service after retirement, they may choose to retain either their pension or draw a salary from the new employment. If a person becomes entitled to more than one pension, they may opt to draw one of the pensions.

Originally published in The News