Finance ministry clarifies Ad-hoc Relief Allowances treatment after BPS-2026 revision

ISLAMABAD: The Ministry of Finance has issued a clarification to remove confusion over the treatment of Ad-hoc Relief Allowances (ARAs) following the revision of Basic Pay Scales (BPS)-2026, making it clear that the allowances will remain frozen while newly recruited federal employees will receive them on a notional basis.

In an Office Memorandum, the Finance Division clarified that the instructions are aimed at addressing numerous queries received after the notification of the revised Basic Pay Scales and allowances for federal civil servants issued on July 21, 2026.

The clarification reiterates that, under paragraph 7 of the earlier notification, all Special Pays, Special Allowances and allowances linked to a percentage of pay stand frozen at the level of their admissibility as of June 30, 2026.

Explaining the status of Ad-hoc Relief Allowance-2023, the Finance Division said the allowance had already been frozen at the level of its admissibility as of June 30, 2023, and would continue to remain frozen.

However, the government has allowed employees joining federal service after the implementation of the new pay scales to receive the allowance on a notional basis.

According to the memorandum, all new entrants will be entitled to Ad-hoc Relief Allowance-2023 at 35 percent for employees in BPS-1 to BPS-16 and 30 percent for officers in BPS-17 to BPS-22, calculated on the minimum of the relevant Basic Pay Scales-2022, with effect from July 1, 2026, until further orders. The allowance will remain frozen at that level.

The Finance Division also clarified the treatment of Ad-hoc Relief Allowance-2024, stating that it will remain frozen at the level of its admissibility as of June 30, 2026.

Under the revised instructions, employees in BPS-1 to BPS-16 will continue to receive the allowance at 25 percent, while employees in BPS-17 to BPS-22 will receive 20 percent, calculated on the Basic Pay Scales-2022.

For employees appointed after July 1, 2026, the same allowance will be admissible on a notional basis at 25 percent for BPS-1 to BPS-16 and 20 percent for BPS-17 to BPS-22, calculated on the minimum of the relevant Basic Pay Scales-2022, and will also remain frozen until further orders.

Copyright Business Recorder, 2026