ISLAMABAD — The federal government has approved a 7% increase in pensions for retired civil and armed forces personnel, effective July 1, 2025, as per a notification issued by the Finance Division on Monday. The decision aims to support pensioners amid rising inflation and cost of living.
This raise will benefit all civil pensioners, including defence-paid civilians, retired armed forces personnel, and civil armed forces pensioners. Importantly, it will also apply to those who retire on or after July 1, 2025, ensuring immediate coverage for new retirees.
The President’s approval was cited in the official Office Memorandum (OM), which explained that the increase will be calculated on the “net pension”—meaning the pension amount excluding medical allowance as of June 30, 2025. This amount will now serve as the baseline for future increments.
The 7% hike also covers pensions under various schemes, including the Pension-cum-Gratuity Scheme (1954), the Liberalized Pension Rules (1977), Extraordinary Pension Rules, and Compassionate Allowances under CSR-353. Family pensions under these rules are also included.
However, the hike does not apply to certain special pensions like the Special Additional Pension granted in place of Orderly Allowance or monetized benefits of a driver/orderly. In cases where pensions are shared between the federal and provincial governments, the 7% increase will be split proportionally based on existing cost-sharing rules.
This step is part of the government’s broader effort to provide financial relief to retirees and manage pension disbursements more equitably across services.