As the government aims to strike a deal with the International Monetary Fund (IMF) under the Extended Fund Facility (EFF), discussions are underway regarding proposals for a 10 to 15% salary increase for public sector employees in the upcoming budget for 2024-25. This move comes with the necessity for the government to demonstrate political will by implementing stringent fiscal measures, including boosting both Federal Board of Revenue (FBR) tax revenues and non-tax revenues while curbing expenditures.
The Ministry of Finance is contemplating raising the salary by 10%, but there are potential pressures to increase it further, possibly up to 12.5% or 15% in the next budget. Additionally, there are discussions about increasing monetization rates for cars for higher-grade officers (grades 20, 21, and 22) by 20 to 25%.
Furthermore, the government plans to introduce pension reforms in the upcoming budget, considering proposals such as imposing taxes on pensioners drawing over Rs100,000 per month and adjusting age limits for public sector employees. Federal government employees may be entitled to a gross pension based on 70% of their average pensionable emoluments drawn during the last 36 months of service prior to retirement.
Options for early retirement after 25 years of service may be available, with a possible penalty of 3% per year reduction in gross pension until the age of superannuation. Family pension provisions may be limited to 10 years for entitled family members after the death or dis-entitlement of the spouse, extendable to 20 years for Shuhada Pension cases and for disabled/special children of pensioners, the family pension may remain admissible for life.
Additionally, federal government employees may have the option to commute a maximum of 25% of their gross pension at the time of retirement. Moreover, if re-employed/appointed in public service after retirement, pensioners may choose between retaining their pension or drawing the salary of the new employment.
