Islamabad, July 8, 2025 — The Finance Ministry has officially notified a 7% increase in pension for retired federal government employees, effective from July 1, 2025. This latest decision comes as part of the government’s commitment to support old-age citizens in managing rising inflation and living expenses.
According to a notification issued on July 7, 2025, the Finance Ministry stated that the President has sanctioned a 7% enhancement in net pension. The increase applies to all civil pensioners of the federal government, including civilians paid from Defence Estimates, as well as retired personnel of the Armed Forces and Civil Armed Forces.
Importantly, the pension increase will also be applicable to individuals retiring on or after July 1, 2025. This ensures that new retirees are not excluded from the benefits of the revised pension structure. The Finance Ministry has clarified that the increase extends to family pensions granted under the Pension-cum-Gratuity Scheme of 1954 and the Liberalized Pension Rules of 1977. Additionally, pension sanctioned under the Federal Civil Services (Extraordinary Pension) Rules and Compassionate Allowance under CSR-353 will also qualify for this increment.
For calculating the admissibility of the increase, the Finance Ministry defines “net pension” as the gross pension drawn as of June 30, 2025, excluding any medical allowance. This “net pension” will serve as the baseline for calculating both the current and any future enhancements. The increase will be maintained separately in accordance with Finance Division O.M. No. 9(3)R-6/2024-403 dated January 1, 2025.
In cases where the gross pension is shared between the Federal Government and any provincial or other government—as per rules laid out in Part-IV of Appendix-III to the Accounts Code, Volume-I—the Finance Ministry has instructed that the pension increase shall be apportioned on a proportional basis between the involved governments.
However, the 7% enhancement will not be applicable on Special Additional Pension granted in lieu of pre-retirement Orderly Allowance or the monetized value of drivers or orderlies.
This pension revision by the Finance Ministry is part of broader fiscal efforts aimed at providing relief to retirees and acknowledging their lifelong public service.