Finance Ministry announces 7% pension increase for retired civil and military personnel effective July 1, 2026
ISLAMABAD: The federal government has approved a 7% pension increase for federal government pensioners, including retired civil servants, armed forces personnel and civil armed forces personnel, with effect from July 1, 2026, according to an Office Memorandum issued by the Ministry of Finance.
The notification states that the increase will be calculated on the baseline pension determined under the Finance Division’s earlier Office Memorandums issued on January 1, 2025, and July 7 and August 5, 2025.
The latest pension enhancement applies to all civil pensioners of the federal government, including civilians paid from defence estimates, retired armed forces personnel and members of the civil armed forces.
According to the Finance Ministry, the 7% pension increase for federal government pensioners will also be admissible to government employees who retire on or after July 1, 2026, ensuring that newly retired employees receive the benefit under the revised pension structure.
The government has further clarified that the 15% pension increase granted in 2022 and the 7% increase announced in 2025 will continue to remain admissible for employees retiring on or after July 1, 2026, subject to the applicable rules governing pension calculations.
The increase will also extend to family pensions sanctioned under the Pension-cum-Gratuity Scheme, 1954, the Liberalized Pension Rules, 1977, pensions granted under the Central Civil Services (Extraordinary Pension) Rules, and compassionate allowance admissible under CSR-353.
In cases where a pension is shared between the federal government and another government under the provisions of the Accounts Code, Volume-I, the additional pension amount arising from the latest increase will be apportioned between the respective governments on a proportional basis.
However, the Ministry of Finance clarified that the 7% pension increase for federal government pensioners will not be applicable to the Special Additional Pension granted in lieu of the pre-retirement orderly allowance or the monetised value of a driver or orderly.
The annual revision is part of the government’s pension policy aimed at providing financial relief to retired public servants while maintaining the existing pension framework. Pension adjustments are generally announced at the beginning of each fiscal year after approval by the federal government.
The latest increase comes as the government continues to implement fiscal measures for FY2026-27, balancing support for pensioners with broader efforts to maintain fiscal discipline and manage public expenditure.