ISLAMABAD – In the federal budget for FY2025–26, the government has increased allocations for pensions by Rs74 billion, setting aside a total of Rs1,055 billion. The largest share, Rs742 billion, has been earmarked for military pensions, while Rs243 billion is allocated for civilian pensions.
Compared to the current fiscal year, military pensions have seen a rise of Rs66 billion. In FY2024–25, Rs662 billion was initially allocated for military pensions, but revised estimates pushed that figure to Rs676 billion. Now, for the upcoming year, the amount has jumped further to Rs742 billion, highlighting the growing pension burden.
Civilian pensions will also see a Rs9 billion hike, rising from the original Rs220 billion to Rs243 billion in FY2025–26. This increase aligns with the revised estimate of Rs234 billion for the outgoing year, reflecting inflationary pressures and a growing number of retirees.
Interestingly, the allocation for the Federal Pension Fund has been reduced. Only Rs4.3 billion has been set aside for the fund, down from Rs10 billion in the current year. This cut may signal a shift in the government’s pension financing strategy.
Overall, pension-related expenses continue to rise steadily. The total pension bill has increased by Rs41 billion compared to FY2024–25, when Rs1,014 billion was allocated. The continued rise underscores the need for long-term pension reforms to ensure fiscal sustainability.