ISLAMABAD: In a move to address the escalating pension costs, the government of Pakistan has enacted a set of pension reforms. These reforms, endorsed by the Economic Coordination Committee (ECC), aim to stabilize the financial sustainability of the country’s pension system.
One of the key components of the reform includes the freezing of certain pension amounts and capping family benefits at a maximum duration of 10 years. Additionally, pension calculations will now be based on 70% of the average salary of the last 24 months prior to retirement. This decision is a response to the increasing strain on the government’s pension expenditures.
The ECC, under the leadership of the Finance Minister, ratified these changes after extensive discussions. A summary of the reforms has been circulated among various ministries for feedback, underscoring the necessity to balance fiscal responsibility with the need to provide for retired workers and their families.
These adjustments were proposed by the Pay and Pension Commission (PPC) 2020, which was tasked with revising pension schemes to mitigate future financial liabilities. Now approved, these changes are scheduled to be implemented according to the provisions laid out in the Budget Speech for 2023-24, indicating a pivotal shift towards more sustainable public spending in Pakistan.
