7% Pension Increase for Retired Federal Employees Announced

Islamabad: The Federal Government has issued a notification announcing a 7% increase in pensions for all retired federal employees, effective from July 1, 2025. Prior to this, notifications for salary increases and a 30% disparity allowance for employees had already been issued.
According to the notification released by the Ministry of Finance, the President of Pakistan has approved a 7% increase in pensions for all federal government civilian pensioners, civilian employees paid from defense estimates, retired armed forces personnel, and retired employees of the Civil Armed Forces, effective from July 1, 2025.
The 7% pension increase will also apply to individuals retiring after July 1, 2025. Furthermore, this increase will benefit those entitled to family pensions under the Pension Scheme of 1954 and the Liberalized Pension Rules of 1977 (as amended from time to time).
Additionally, pensioners who receive compassionate allowances under the Federal Civil Services (Extraordinary Pensions) Rules or CSR 353 will also benefit from this increase.
The government clarified that “net pension” refers to the amount currently received by the pensioner as of June 30, 2025, excluding any medical allowance. This amount will be used as the basis for future and current increases. The 7% increase will remain as a separate sum, with the foundation laid by the Ministry of Finance’s announcement on January 1, 2025.
Further details in the document specify that if pension payments are made under joint principles between the federal government and any other government, the 7% increase will be divided proportionally between both governments. However, this increase will not apply to special additional pensions given in exchange for pre-retirement orderly allowances or monetized driver and orderly facilities.