Major Changes Approved to Federal Government’s Pension System: A Brief Overview
The Economic Coordination Committee (ECC) recently approved significant changes to the federal government’s pension system, set to be implemented on July 1. The amendments will affect civilians immediately, with the armed forces following suit in the next fiscal year.
Under the new rules, gross pension will be based on 70% of the average salary in the last two years of service. Additionally, ordinary family pension will apply for 10 years or for the lifetime of children with special needs. Retirees who are rehired will have the option to retain either their pension or salary.
The ECC also approved grants totaling nearly Rs500 billion, along with the relaunch of the “Risk Coverage Scheme for SMEs” and the return of Rs11.13bn to the Universal Service Fund to address a budget shortfall.
These changes align with the recommendations of the Pay and Pension Commission of 2020, aiming to control future pension costs without compromising the government’s pension philosophy.
Overall, the new pension system aims to streamline pension processes and ensure financial stability for both current and future retirees.
Article Source: Dawn (Published on June 28th, 2024)