Pakistani citizens shocked on the new Pension reforms by the Finance Ministry. The new reforms are for all government employees except the Armed or Defence Forces of Pakistan. The new reforms are said to restrict pension for 3rd tier employees. The divorced or unmarried individuals will receive pension for up to 10 years only rather than lifetime pension.
The summary of the new “Pension Reforms” has already been said to the Prime Minister’s Office. According to the new reforms, the calculation of pension will only take into account the last years of salary only. According to reports the new reforms are said to be sent to the PM already and exclude the Armed Forces of Pakistan. Moreover, the calculation of the pension has also been reduced to the salary withdrawn in the last 3 years instead of the existing reforms which calculated the pension from the last salary withdrawn by the employee.
What are The New Pension Reforms 2023
The report is also said to contain a new formula for the commutation of pension and payment of the upfront lump sum amount at the time of retirement. According to existing reforms 35% of the pension accumulated is to be given at the time of retirement while the rest 65% is given in the subsequent years of retirement. However, the new reforms recommended the payment be cut down by 25% to 75% and be paid in monthly instalments over the years after retirement instead of an upfront 35% right after retirement.
Moreover, the policy is also advised to be changed for the pensions of 3rd tier individuals such as unmarried or widowed daughters. According to the existing pension reforms, they were to be paid pension for lifetime but the new reforms suggested slashing their pension to 10 years only. However, there is an exemption for Shuhada families as they’ll receive a pension for 20 years instead of 10 years. The pension for disabled sons/daughters is set for lifetime as well.
Early Retirement Penalization in New Pension Reforms 2023
Sources also suggested that in the future there will be an increase in pension that would be indexed by the CPI with an increase of 10% per annum. The government will also discourage early retirement there will be a penalty of 3% to 10% to the individuals who choose to retire early. The employees under the federal government will be eligible to take up to 25% of their pension at the time of retirement provided they meet the terms and conditions of the federal government.
Multiple Pension Policy in the New Pension Reforms for 2023
There will also be a change in the policy of authorising multiple pensions to an individual which might not affect the family of shuhadas or employees in service. Also, if an individual is rehired in the public sector again, they would not be applicable for both salary and pension. The individual will have to make a choice and choose either the salary or the pension. Moreover, for personnel retired from the Armed Forces, both pension and pay will be authorised till the age of 60 years till in case of re-employment in the public sector.
As of now, the compounding effect is used to calculate the increase in pension every year. According to this, the increase is given on the last withdrawn pension. However, in the new reforms, the government has suggested giving the increase in pension at the time of retirement.
The report also stated that employees are eligible to apply for early retirement after 25 years of service but they’ll be liable for a 3% reduction per year in their gross pension which will start at the time of retirement till the superannuation age. Moreover, if the inflation rate rises 10% for a year then the government may issue adhoc relief for people but that relief will end as soon as the inflation rate is dropped or normalised. Check here to see the reduction of fares in Islamabad by FDE. 10% Reduction on Public Transport Fares in Islamabad