Monday June 24, 2024

Pay, pension of govt officials likely to rise by 10-15pc

Government is mulling over options to fix FBR tax revenue target of over Rs12.5 trillion in coming budget

By Mehtab Haider
May 28, 2024
A representational image showing several employees in an office. — AFP/File
A representational image showing several employees in an office. — AFP/File

ISLAMABAD: The government is working on different proposals for salary increases in the range of 10 to 15 percent for public sector employees in the upcoming budget for 2024-25. Amid the wish of the government to strike a deal with the IMF under Extended Fund Facility (EFF) at a range of $6 billion, the government will have to demonstrate its political will to place stringent fiscal measures including raising revenues of both FBR tax revenues and non-tax revenues as well as restricting the expenditures side.

The government is mulling over the options to fix the FBR tax revenue target of over Rs12.5 trillion in the coming budget. On the salaries front, the Ministry of Finance wants to raise the salary by just 10 percent. Still, there might be some pressures so there might be a fiscal adjustment to jack it up to 2.5 percent or a maximum of 5 percent to increase the salary increase in the range of 12.5 or 15 percent in the next budget.

There is another proposal under consideration to jack up monetisation of cars for higher grade officers of grades 20, 21, and 22 in the range of 20 to 25 percent. The grade 20 officers have been getting monetization of cars in the range of Rs67,000 per month, grade 21 officers in range of Rs77,000 per month and grade 22 officers of Rs87,000 per month. Now it is being considered that it might be jacked keeping in view inflationary pressures. The officers who are enjoying both cars and monetization amount argued that since inception of this policy in 2012 it was never jacked up.

Top official sources confirmed to The News on Monday that the government is all set to introduce pension reforms in the next budget for 2024-25. The proposal is also under consideration to slap tax on pensioners who are drawing pension of over Rs100,000 per month. It is likely that the government may introduce different slabs for higher bracket pensioners from the next budget.

“We may propose jacking up age limit of public sector employees by two or five years along with a comprehensive package for pension reforms in the next budget for 2024-25,” top official sources confirmed to The News here on Monday.

According to the different proposals, federal government employees shall be entitled to a gross pension based on 70 percent of average pensionable emoluments drawn during the last thirty-six months of service prior to retirement.

A government employee may opt for early retirement after putting in 25 years of service; however, the employee might be liable to a penalty of 3 percent per year reduction in gross pension with effect from retiring year till the age of superannuation.

Any increase in pension might be granted on the pension calculated at the time of retirement. Each increase might be maintained as a separate amount until the time, the government may take a decision to review and authorise any additional pensionary benefits.

A family pension, after the death or dis-entitlement of the spouse, might only be admissible to remaining entitled family members for a maximum period of 10 years; Provided that in case of Shuhada Pension, the maximum period for entitled family members may be provided for 20 years after the death or dis-entitlement of spouse; Provided further that in case of disabled/Special Children of a pensioner, the Family Pension might remain admissible for life of such children.

The federal government employee may be given an option to commute maximum of 25 percent of his Gross Pension at the time of retirement on the terms and conditions prescribed by the federal government.

In an event where a pensioner of the federal government is re-employed/appointed in public service after retirement whether on regular/contract basis or whatsoever mode of employment, the pensioner may have the option to retain either’ pension or to draw the salary of said employment during the period of that employment. In an event where a person becomes entitled to more than one pension, such person might have authorized to opt to draw one of the pensions.