Thu Jan 02 06:53:52 UTC 2025: ## Pakistan Slashing Pension Benefits to Curb Growing Bill

**Islamabad, January 2, 2025** – The Pakistani government has implemented drastic cuts to pension benefits for retired civil and military personnel in an effort to control a burgeoning pension bill exceeding Rs 1 trillion. Three separate notifications issued by the Ministry of Finance on January 1st detail the changes, which include eliminating multiple pensions, basing future pension calculations on the average of the last two years’ salaries (instead of the final salary), and ending annual compounding of pension increases.

These measures, based on recommendations from the 2020 Pay and Pension Commission under the Imran Khan government, will affect both existing and future pensioners, except for those already retired who are receiving only one pension. Serving government employees currently receiving both salary and a pension will also be impacted. The changes are effective immediately.

The pension bill, the fourth largest expenditure after debt servicing, defense, and development, has seen a 24% increase compared to last year, with military pensions accounting for 66% (Rs 662 billion) of the allocated Rs 1.014 trillion. The government anticipates that these reforms will significantly reduce the pension bill over the next decade.

Furthermore, the traditional pension scheme has already been abolished for civilian employees hired after July 1, 2024, and will be phased out for defense employees from July 1, 2025, replaced with a contributory pension system.

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