Government Introduces New Pension Reform Criteria In Budget 2025–26

KARACHI: On Tuesday, the federal government introduced the new pension criteria in the latest fiscal year budget 2025-26 to ease the government’s budgetary burden.

Significant changes in the budget:

The new pension criteria end the dual financial benefits of the pensioners. On Tuesday, the Finance Minister, Muhammad Aurangzeb, presented the new pension amendments. As per the latest changes, the pensioners are now left with two options: their pension or a new salary payment.

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According to the new reforms, some pensioners must pay a 5% tax. However, not all pensioners are bound to pay a 5% tax. The amendments mentioned the age and pension of these pensioners. Pensioners under 70 with an annual retirement exceeding Rs 10 million are bound to pay the tax. It is clear in the bill that the low and middle-pension holders are not bound to pay the tax.

No more multiple pensions:

The reform bill also prevents pensioners from receiving numerous pensions and states that the deceased pensioner’s spouse can only receive the pension amount for 10 years after the pensioner’s death. 

The Finance Minister has thus said that the decision follows executive orders and was made due to the overloaded burden on the national exchequer. He also stated that the new reforms align the pension structure with the Consumer Price Index (CPI) to ensure sustainability. He stressed the government’s commitment to a feasible pension system.