Government Stops Giving Many Pensions and Limits Payments to Family for 10 Years
Government Limits Multiple Pensions, Sets 10-Year Cap on Family Payouts
The federal government has stopped giving multiple pensions and capped payments to family members at 10 years.
Under the new rules, pensions will be calculated based on 70% of the average salary received in the last 24 months before retirement. This decision aims to control the increasing pension costs, as reported by a national daily.
The Pay and Pension Commission-2020 (PPC-2020) was assigned to review the current pension system and suggest changes to manage future pension expenses. These changes were announced during the budget speech for the fiscal year 2023-24.
The Finance Division proposed several amendments based on the recommendations of PPC-2020. According to Regulation-4 of the Civil Service Regulations (CSR), the government has the authority to modify pay, allowances, leave, and pension provisions as needed.
The proposed amendments were circulated to the Ministry of Defence, Establishment Division, and Ministry of Interior for feedback. Effective from July 1, 2024, the key amendments include:
– Gross Pension Calculation: Pensioners will receive 70% of their average salary during the last 24 months of service.
– Voluntary Retirement Penalties: Employees retiring after 25 years will face a maximum 20% reduction, capped at 3% annually.
– Pension Increases: Adjustments will be based on the baseline pension and reviewed every three years.
– Ordinary Family Pension: Available for ten years after the spouse’s death, or lifelong for disabled children; for other children, until age 21 or for ten years, whichever is later.
– Special Family Pension: Available for 25 years after the spouse’s death, or lifelong for disabled children, at 50% of the last drawn pension.
– Re-employment: Pensioners re-employed after age 60 can choose between retaining their pension or receiving a salary.
– Annual Increases: Adjusted annually based on 80% of the average inflation rate over the last two years, using the Consumer Price Index (CPI).
– Establishment of a pension fund using savings from these reforms, with a contributory scheme for new entrants starting on July 1, 2024.
