Govt notifies 7% hike in federal pensions from July 1

ISLAMABAD: Finance Division notified the 7% increase with effect from 1 July, 2025 to all Civil Pensioners of the Federal Government including Civilians paid from Defence Estimates as well as retired Armed Forces Personnel and Civil Armed Forces Personnel.

An office memorandum (OM) issued by the Division stated that the President has been pleased to sanction an increase @ 7% of net pension with effect from 1 July, 2025 to all Civil Pensioners of the Federal Government including Civilians paid from Defence Estimates as well as retired Armed Forces Personnel and Civil Armed Forces Personnel.

The increase in pension @ 7% as mentioned at para-1 above will also be admissible to the pensioners who would retire on or after 01.07.2025.

The increase will also be admissible on family pension granted under the Pension-cum-Gratuity Scheme, 1954, and Liberalized Pension Rules, 1977, as amended from time to time, on pension sanctioned under the Federal Civil Services (Extraordinary Pension) Rules as well as on the Compassionate Allowance under CSR-353.

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For the purpose of admissibility of increase as indicated at para-1 above, the term “net pension” means “net pension being drawn as on 30.06.2025 minus medical allowance”.

This pension will be termed as baseline pension for computation of the instant and future increases.

The said increase will be maintained as a separate amount in terms of Finance Division O.M. No.9 (3)R-6/2024-403 dated 01.01.2025.

If the gross pension sanctioned by the Federal Government is shared with any Government in accordance with the rules laid down in Part-IV of Appendix-III to the Accounts Code, Volume-I, the amount of the increase in pension will be apportioned between the Federal Government and the other Government concerned on proportionate basis.

The increase in pension sanctioned in this O.M. will not be admissible on Special Additional Pension allowed in lieu of pre-retirement Orderly Allowance and the monetized value of a driver or an orderly.