Finance Minister Muhammad Aurangzeb on Tuesday announced significant pension reforms as part of the federal budget for 2025–26, aimed at easing the growing financial pressure on the national treasury. The reforms come in response to decades of policy changes through executive orders that have escalated the state’s pension liabilities.
Key highlights of the pension reforms include a discouragement of early retirements and the implementation of a system that links pension increases to the Consumer Price Index (CPI), aligning them with inflation trends.
In a move to streamline pension disbursements, the duration of family pension payments will now be capped at ten years following the death of a spouse. Furthermore, the practice of drawing multiple pensions has been abolished to prevent overlapping benefits.
The finance minister also clarified that retirees who return to government service will be required to choose between receiving a pension or a salary, but not both. This measure is expected to improve transparency and reduce redundancy in government expenditures.
These pension reforms are part of a broader strategy to ensure long-term fiscal sustainability and efficient allocation of public resources.
