ISLAMABAD: In compliance with the demands of foreign creditors namely the International Monetary Fund (IMF) and the World Bank (WB), the government has banned the collection of double pension from the exchequer, The News reported on Thursday.
Currently, the gross pension is calculated based on the last 30 years of drawn wages. However, the government has changed this formula and pension benefits will now be calculated based on the 24 months before retirement.
The move was taken by the federal government, assuring that changes in pensions are the need of the day as pension liabilities are witnessing a sharp increase.
It was proposed that employees would be entitled to a gross pension equal to 70% of the average pension benefits drawn in the last 36 months of service before retirement.
A top official told the publication on Wednesday night that pension reforms are necessary as future liabilities mount as well as an escalating debt burden. The pension account liabilities of the Center and the four provinces are estimated at Rs 40-45 trillion considering the size of the public sector at existing levels.
The regulatory wing of the Ministry of Finance has issued various notices that on the recommendation of the Wage and Pension Commission-2020, it has been decided that from now on, if a person becomes entitled to more than one pension, that person will only be entitled to opt for drawing one of the pensions, for provided that; (i) in case an in-service Federal Government employee becomes eligible for pension, such employee shall not be entitled to such pension and (ii) the spouse in employment/pensioner shall be entitled to the pension of his/her spouse on his/her own pay/ pension.
As per the further notification for calculation of benefits for the purpose of pension, it has been decided that the pension will be calculated on the basis of the average of the pensionary benefits drawn during the last 24 months of service before retirement.
According to another announcement, it was decided that the future methodology of increasing the pension will be as below;
a) The net pension [gross pension reduced by the credited part of the pension] calculated at the time of retirement will be called the basic pension. Any increase in pension will be granted as basic pension.
(c) Each increase shall be maintained as a separate amount until the Federal Government decides to review and authorize any additional retirement benefits.
d) The basic pension will be reviewed every three years by the Wages and Pensions Committee. The current pension of existing pensioners will now be treated as a basic pension. The basic pension is deemed to include the reinstated portion of the pension once it is reinstated. The existing guidelines are amended with immediate effect, the ministry said.
