In the 2025–26 federal budget, the government has introduced major pension reforms to reduce financial pressure on the national budget. These changes are designed to make the pension system more sustainable in the long run.
One important change is that family pensions will now only be given for up to 10 years after the pensioner’s spouse passes away. Also, people will no longer be allowed to receive more than one pension at a time.
A new tax has been introduced for high-income pensioners. Retired individuals under the age of 70 who earn more than Rs 10 million a year from pensions will now have to pay a 5% tax. However, those with low or middle incomes will not be affected and will continue receiving their pensions without any tax.
Another major reform is that retired government employees who return to work will now have to choose between receiving their pension or their new salary. They will no longer be allowed to collect both at the same time, which helps avoid double financial benefits from public funds.
To stop early retirements, the new reforms make it less attractive to retire before the usual age. Future increases in pension amounts will also be linked to the Consumer Price Index (CPI), which adjusts according to inflation and cost of living.
These reforms are part of the government’s broader effort to manage public spending more wisely and ensure that the pension system stays fair and financially stable for future generations.
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