(Web Desk) — The federal government has implemented significant reforms aimed at managing pension expenditures more sustainably. Under these new measures, multiple pensions have been banned, and the duration of pension payments to family members has been capped at 10 years.

Effective from July 1, 2024, pensions will be calculated based on 70% of the average pensionable emoluments drawn during the final 24 months of service before retirement. This adjustment follows recommendations from the Pay and Pension Commission-2020 (PPC-2020), which were incorporated into the budget for the fiscal year 2023-24.

The Finance Division proposed several amendments, which include penalties for voluntary retirement after 25 years of service, reducing pensions by 3% annually up to a maximum of 20%, applicable to armed forces and civil armed forces if retiring before reaching their prescribed rank of service.

Key changes also involve adjustments to family pensions, with ordinary family pensions available for ten years after the spouse’s death or until children reach the age of 21, and special family pensions set at 50% of the deceased’s last drawn pension for 25 years or for life for disabled children.

Moreover, pension increases will now be linked to the net pension at retirement and reviewed every three years, with annual adjustments pegged at 80% of the average inflation rate over the preceding two years based on the Consumer Price Index (CPI).

Additionally, the government plans to establish a pension fund using savings from these reforms and will introduce a contributory scheme for new entrants starting July 1, 2024.

These reforms aim to curb rising pension costs and ensure financial sustainability in the long term, reflecting the government’s commitment to prudent fiscal management.