Islamabad: In a significant shift from previous policies, the Finance Ministry plans to adjust pensions for retired civil servants based on inflation rather than a fixed rate. This change, set to be implemented over the next two years, aims to tie a substantial 80% of pension increases to inflation metrics.

According to Zameen.Com, the decision replaces the former approach of a flat 15% pension increase, a move driven by the rising financial burden of fixed pension increments. Instead, future adjustments will be closely aligned with inflation figures provided by the State Bank of Pakistan, reflecting recommendations made by the Pay and Pension Commission in 2020.

The government’s strategy also includes efforts to reduce inflation to single digits by the next fiscal year, with PKR 1,014 billion earmarked for pensions in the current budget. This approach is expected to provide a more sustainable solution to managing the pension scheme amid fluctuating economic conditions.