Govt revises pension system, introduces new calculation method

The federal government has announced major reforms in the pension system, introducing a new calculation method and restrictions on multiple pensions, according to a notification issued on Wednesday.

Under the revised policy, pensions will now be calculated based on the average salary of the last 24 months instead of the final salary. Additionally, employees will no longer be eligible to receive multiple pensions, a move aimed at reducing financial burden on the national exchequer.

The new formula will not apply to employees opting for voluntary retirement, and incremental raises in the final year of service will no longer be factored into the pension calculation.

The notification also outlined key clarifications:

Days worked in the final month before retirement will be counted as a full month for pension calculations.
Final-year salary increments will be excluded from pension calculations.
Family pensions will now be determined based on net pension values instead of gross figures.
The government’s decision is expected to streamline pension disbursement while ensuring financial sustainability in the long run. However, the move may face resistance from public sector employees concerned about the impact on their post-retirement benefits.