Federal Government Issues Retirement Pay Update, Withdraws Pension Salary Limits

The federal government has announced a major Retirement Pay Update that brings relief to retired public servants. It has withdrawn two notifications that restricted earnings after re-employment. As a result, the decision takes effect immediately
The Ministry of Finance confirmed the change through a new office memorandum. Moreover, the move removes uncertainty for retirees who return to government roles. Officials say the step restores earlier benefits.

Government Reverses Earlier Restriction

Earlier, the Ministry of Finance issued a notification on April 22, 2025. That order forced retired individuals to choose between pension or salary. However, the government has now cancelled that requirement.
Under the withdrawn rule, people who rejoined service after age 60 faced strict limits. For example, they could not receive both forms of income together. Therefore, many retirees raised concerns over financial security.
The latest decision removes that condition completely. In addition, it allows experienced professionals to return without financial loss. The change also supports inclusive workforce policies.

Pension Reform Still Remains in Place

Despite this relief, broader pension reforms remain unchanged. In March, the federal government introduced the Contributory Pension Scheme. The reform aimed to manage rising long-term costs.
Officials estimate pension spending at Rs1.05 trillion for 2024–25. This figure shows a 29 percent increase from the previous year. As a result, authorities continue to push structural changes.
Under the scheme, employees cannot access funds before retirement. Upon exit, they may withdraw up to 25 percent. The remaining amount stays invested until age 80 or for 20 years.
Overall, the Retirement Pay Update balances fiscal reform with fairness. It also reassures retirees seeking continued public service.