ISLAMABAD – The federal government has notified a 7 percent increase in pensions for its retired employees.
The Ministry of Finance has issued a notification, saying the the pension hike will apply to retired personnel from the civilian sector, armed forces, and civil armed forces.
The increase will be effective from July 1, 2025, and will apply to all those who retire on or after this date.
In addition to the pension revision, the ministry has also announced key administrative measures to control government expenditures. All vacant positions that have remained unfilled for the past three years have now been abolished.
Furthermore, the ban on the creation of new posts will continue to remain in place.
The notification also reiterates restrictions on various government expenditures for the current fiscal year. These include a ban on the purchase of government vehicles, machinery, and equipment, as well as overseas medical treatment and non-essential foreign trips funded by public money.
10pc Increase in Salaries Notified
Earlier this month, the federal government officially issued a notification for a 10 percent increase in running basic salaries of government employees in the form of Ad-hoc Relief Allowance.
The notification states that the 10% increase will be based on the current basic salary under the head of Ad-hoc Relief Allowance. The salary increase will be effective from July 1, 2025.
It stated that the President has approved a 10% Ad-hoc Relief Allowance 2025 for civil employees of the federal government, armed forces, civil armed forces, and civilian personnel receiving salaries from defense expenditure.
It added that contract employees working under standard terms and conditions on Basic Pay Scales will also benefit from this increase.
According to the notification, the amount of Ad-hoc Relief Allowance 2025 will be taxable under the Income Tax Act.
Additionally, this allowance will be admissible during general leave or Leave Preparatory to Retirement (LPR), however, it will not apply during extraordinary leave.
This allowance will not be included in the calculation of pension or gratuity, nor will it be considered for house rent deduction.
According to the notification, this allowance will not be applicable during foreign postings or deputations. However, upon return from abroad, employees will be given this allowance according to the same rate and amount as applicable during their domestic posting.
In addition, the notification further clarifies that the basic salary will include the personal allowance which is granted upon exceeding the maximum limit of the current pay scale after an annual increment.
The federal government has also clarified that this Ad-hoc Relief Allowance for the year 2025–26 will be provided from the budget of the respective ministries, divisions, and departments, and no additional or supplementary grant will be issued for this purpose.
