ISLAMABAD (PEN) : The federal government is reportedly considering a one-year delay in the implementation of contributory pension reforms for armed forces personnel, originally scheduled to begin on July 1, 2025, according to official sources.
Defence Ministry Flags Structural Concerns
Sources within the Ministry of Finance confirmed that the postponement follows concerns raised by the Ministry of Defence regarding the distinct service structure and tenure of military personnel, which differ significantly from those of civilian employees.
While the contributory pension system has already been introduced for new civilian government employees from July 1, 2024, its extension to the military now appears set for deferral until July 2026.
Rising Pension Burden Spurs Reform
Pension reform has been a key component of the government’s fiscal strategy, aimed at easing the growing financial strain caused by the existing pay-as-you-go pension scheme. The shift to a contributory model would share future pension liabilities between the government and its employees.
In the federal budget for FY 2025–26, a total of *Rs846 billion* has been allocated for armed forces’ pay and pensions. This includes:
Rs363 billion* for basic salaries
Rs482 billion* for allowances
Rs742 billion* separately earmarked for military pensions
Government to Seek IMF Nod on Teachers’ Rebate
Meanwhile, the government has drawn criticism for abolishing the *25% income tax rebate for teachers* in the current budget. In response to mounting pressure from educators and lawmakers, officials say a formal request will be made to the International Monetary Fund (IMF) to restore the rebate or approve alternate relief measures.
“Due to pressure from lawmakers and teaching associations, the government is engaging the IMF to reconsider the decision,” a senior finance official confirmed. The authorities have also agreed to *refund the tax collected from teachers during the ongoing fiscal year*, offering some immediate relief.
Budget Increases for Key State Institutions
Despite the government’s broader austerity narrative, budget allocations for the *Presidency and Prime Minister’s House* have been increased.
The Presidency’s budget rose from *Rs2.26 billion to Rs2.63 billion*
The Prime Minister’s House allocation increased from *Rs1.65 billion to Rs1.75 billion*
These adjustments have sparked further scrutiny amid ongoing fiscal reforms.