Retired civil, military personnel: Govt notifies 7pc rise in pensions

ISLAMABAD: The federal government has notified a 7 percent increase in pensions for all federal government pensioners with effect from July 1, 2026, extending the relief to retired civilian employees, armed forces personnel, civil armed forces, and family pensioners.

According to an Office Memorandum issued by the Finance Division, the increase will be calculated on the baseline pension, a mechanism introduced under the revised pension policy, rather than on the gross or net pension. The latest increase applies to all civil pensioners of the federal government, including civilians paid from defence estimates, retired armed forces personnel and civil armed forces personnel.

The notification further stated that the enhanced pension will also be admissible to employees retiring on or after July 1, 2026.

The Finance Division said the baseline pension would be determined in accordance with previous notifications issued in January, July and August 2025, under which the government shifted to a baseline pension formula to streamline future pension increases. Under the revised methodology, annual pension increases are calculated on the baseline pension instead of the enhanced pension amount.

The notification clarified that pensioners retiring on or after July 1, 2026 would remain entitled to the 15 percent pension increase granted in 2022 and the 7 percent increase announced in 2025, in addition to the latest increase wherever applicable under the baseline pension framework.

The latest increase will also be admissible on family pensions granted under the Pension-cum-Gratuity Scheme, 1954, the Liberalized Pension Rules, 1977, pensions sanctioned under the Central Civil Services (Extraordinary Pension) Rules, and compassionate allowance under CSR-353, ensuring that widows and other eligible family beneficiaries receive the revised payments.

The Finance Division further stated that where pension liabilities are shared between the federal government and another government under the applicable provisions of the Accounts Code, the additional pension liability arising from the 7 percent increase would be apportioned proportionately between the concerned governments.

However, the government made it clear that the latest increase would not be admissible on the Special Additional Pension granted in lieu of the pre-retirement orderly allowance or on the monetized value of a driver or orderly, maintaining the long-standing exclusion of these components from annual pension enhancements.

Copyright Business Recorder, 2026