Budget 2024-25: Govt Servants to get 10-15pc salary increase

Budget 2024-25: Govt Servants to get 10-15pc salary increase.

Budget 2024-25: Potential Salary Hike and Pension Reforms for Pakistan’s Government Employees

Pakistan’s upcoming budget for 2024-25 is sparking discussions surrounding potential salary increases and pension reforms for government employees.

This news is particularly relevant for public sector workers and those interested in the country’s economic landscape.

Salary Increase Proposals:

The government is considering proposals for a 10% to 15% salary hike for government employees. This move aims to address rising inflation and improve employee living standards.

The Ministry of Finance favors a 10% increase, but negotiations might push this upwards due to inflationary pressures.

Factors Influencing Salary Increase:

Securing IMF Loan: The government’s focus on boosting tax revenue through the FBR is likely tied to securing a $6 billion Extended Fund Facility (EFF) agreement with the International Monetary Fund (IMF). This agreement often comes with fiscal consolidation measures.
Inflation Adjustment: The proposals acknowledge the impact of inflation on current salaries, which haven’t seen adjustments since 2012.

Car Monetization Allowance Increase:

Another proposal includes a 20% to 25% increase in car monetization allowance for high-ranking officers (grades 20, 21, and 22).

This allowance aims to offset the rising costs of car maintenance and operation.

Pension Reforms on the Horizon:

The budget also proposes pension reforms for the 2024-25 fiscal year. Key ideas include:

Taxing High Pensions: Pensioners receiving over Rs. 100,000 per month might face taxation. This could incentivize a tiered tax structure for higher pension brackets.
Early Retirement: The option for early retirement after 25 years of service could be introduced. However, this would come with a 3% annual reduction in gross pension until reaching the standard retirement age. This discourages early retirement and protects long-term financial security.
Calculating Gross Pension: The proposed calculation for gross pension involves 70% of an employee’s average pensionable earnings over the last 3 years before retirement.

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