Islamabad: In a significant policy shift, the Finance Ministry plans to transition from a flat-rate increase to an inflation-linked adjustment for pension increases for retired civil servants over the next two years.

According to Zameen.Com, the new approach, designed to ease the growing pension burden, will see future pension increments tied to an 80% inflation adjustment based on data from the State Bank of Pakistan (SBP). This change follows the previous budget’s flat increase of 15% and adheres to recommendations made by the Pay and Pension Commission in 2020.

The government is also focused on reducing inflation to single digits by the next fiscal year and has allocated PKR 1,014 billion for pensions this financial year, highlighting its commitment to managing economic pressures while supporting its retired workforce.