The federal cabinet approved a 10% pay raise for federal employees and a 7% pension boost for pensioners during its June 10, 2025, meeting. The planned Rs 17.6 trillion Federal Budget for 2025–2026 includes this decision.
Muhammad Aurangzeb, the federal finance minister, stressed that although the plan is in line with inflationary tendencies, it is the most relief the government can currently provide. After weighing options including a 6% rise, the cabinet, led by Prime Minister Shehbaz Sharif, finally accepted the 10% boost, despite initial pressure from the PPP, a coalition partner, for a more drastic increase.
All federal employees, from Grade 1 to Grade 22, are eligible for the pay rise, which is equivalent to the pension increase for retirees.
Additionally, the monthly benefit for employees with disabilities would increase from Rs 4,000 to Rs 6,000.
Cabinet members also discussed national security, praising previous sacrifices and denouncing India’s suspension of the Indus Waters Treaty, underscoring the government’s ongoing focus on defense preparedness.
The budget proposal’s other taxpayer benefits, such lower income tax rates for salaried individuals and a 20% rise in defence spending allocated at Rs 2.55 trillion, align with these relief measures.
