The federal government has unveiled significant reforms to the pension system, introducing a new calculation method and imposing 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 rather than the final salary. This change aims to alleviate the financial burden on the national exchequer by eliminating the eligibility for multiple pensions.
Notably, the new formula will not apply to employees who choose voluntary retirement, and any incremental raises received in the final year of service will no longer be included in the pension calculation.
The notification also provided key clarifications regarding the new policy:
- 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 the pension disbursement process while ensuring long-term financial sustainability. However, the reforms may face pushback from public sector employees who are concerned about the potential impact on their post-retirement benefits.
