Future Increase Methodology in Pension
Introduction
The Government of Pakistan has recently issued a new Office Memorandum outlining the future increase methodology for pensions.1 This change is based on the recommendations of the Pay and Pension Commission-2020.
Key Points
- Baseline Pension: The net pension calculated at the time of retirement, after deducting the commuted portion, will be considered the baseline pension.
- Future Increases: Any future pension increases will be granted on top of the baseline pension.
- Separate Increases: Each increase will be maintained as a separate amount until the government decides to review and authorize additional pensionary benefits.
- Baseline Review: The baseline pension will be reviewed by the Pay and Pension Committee every three years.2
- Existing Pensioners: For existing pensioners, their current pension on the date of the Office Memorandum will be considered the baseline pension.
- Restored Commuted Portion: If a commuted portion of pension is restored, it will be included in the baseline pension.3
FAQs
Q: What is the baseline pension?
A: The baseline pension is the net pension calculated at the time of retirement, after deducting the commuted portion.4
Q: How will future pension increases be calculated?
A: Future increases will be granted on top of the baseline pension.
Q: Will each increase be maintained separately?
A: Yes, each increase will be maintained as a separate amount until the government decides to review and authorize additional pensionary benefits.
Q: How often will the baseline pension be reviewed?
A: The baseline pension will be reviewed by the Pay and Pension Committee every three years.
Q: What about existing pensioners?
A: For existing pensioners, their current pension on the date of the Office Memorandum will be considered the baseline pension.
Q: What if a commuted portion of pension is restored?
A: If a commuted portion of pension is restored, it will be included in the baseline pension.5
Conclusion
The new future increase methodology for pensions is a significant change that will affect all pensioners in Pakistan. It is important for pensioners to understand the new rules and how they will be applied.
