The Finance Ministry is presumably to modify its plan for pension increases for retired civil servants. Rather than a lump sum raise, pensions may go up by 80% over the next 2 years, based on the inflation rate, according to high-level references.

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Authorities say the Ministry is evaluating a new system that links Government Pension Raise to inflation. This modification is desired to ease the growing pension load on the national budget and Pension Benefits. Presently, the government has set aside Rs. 1,014 billion for pensions in this financial year.

Earlier, the Ministry prepared a flat 15% increase in pensions for retired employees. However, under the new system, future increases will be modified according to inflation rates provided by the State Bank of Pakistan. This approach follows suggestions from the Pay and Pension Commission 2020, which suggested that pension adjustments should be linked to inflation.

Additionally, the Finance Ministry is operating to get inflation down to single digits by the next fiscal year.

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