The federal government has issued a notification approving a 7% increase in pensions for all retired employees, effective from 1 July 2025. This follows earlier notifications regarding salary increases and a 30% disparity allowance for serving government employees.
According to the Finance Ministry’s notification, the President has approved the increment for all categories of federal pensioners. This includes retired civilian employees under defence estimates, armed forces veterans, and former members of the civil armed forces.
The 7% increase will also apply to individuals retiring on or after 1 July 2025. Family pensioners eligible under the Pension-cum-Gratuity Scheme of 1954 and the Liberalized Pension Rules of 1977 will also benefit from this adjustment.
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Moreover, the increment extends to recipients of compassionate allowances under the Federal Civil Services (Extraordinary Pension) Rules and CSR-353.
Officials clarified that the term “net pension” refers to the basic pension amount being received as of 30 June 2025, excluding any medical allowance. This amount will serve as the base for the 7% hike, which will remain a separate component. The increase is based on the Finance Ministry’s circular issued on 1 January 2025.
The notification also states that if a pension is being paid jointly by the federal and any other government, the increase will be divided proportionally. However, this hike will not apply to special additional pensions granted in lieu of pre-retirement orderly allowances or monetised driver/orderly facilities.