The federal government has introduced key pension reforms in the Budget 2025-26. These changes aim to ease pressure on the national treasury. Finance Minister Muhammad Aurangzeb shared these updates during his budget speech. He explained that the pension system had seen several changes through executive orders over past decades. These changes increased the financial burden on the government.
To fix the system, the government has now introduced formal reforms. These include linking pension increases with the Consumer Price Index (CPI). The aim is to make the system more transparent and sustainable. The minister also said that early retirement will now be discouraged. This step is meant to reduce long-term pension payouts.
A major change is the limitation on family pensions. After the spouse of a pensioner passes away, the family pension will now only be given for 10 years. Earlier, these payments could last for a lifetime, which added to costs. This reform is expected to control long-term pension liabilities.
Another important step is the end of receiving multiple pensions. People will no longer be allowed to get more than one pension at a time. Additionally, those who are rehired after retirement must choose between a salary or a pension—not both. This is to prevent double benefits from public funds.
These reforms mark a significant shift in how pensions will be managed in Pakistan. While some may find these changes tough, the government believes they are necessary for future economic stability. With growing financial challenges, such reforms are seen as a step toward long-term sustainability.