The Finance Division has issued an official notification granting a 7% increase in net pension for all federal retirees, including civilian employees, armed forces personnel, and civil armed forces pensioners, effective July 1, 2025.

Who Qualifies for the Pension Hike
The increase applies to:

  • Civil servants paid under the federal government budget
  • Retired personnel from the armed forces and civil armed forces
  • Family pensioners under schemes such as the Pension‑cum‑Gratuity Scheme (1954) and Liberalized Pension Rules (1977)
  • Individuals retiring on or after July 1, 2025

Calculation Based on June 30, 2025 Pension Figures
The 7% increase is computed on the net pension as of June 30, 2025, excluding medical allowances. This amount will serve as the baseline for both current and future pension calculations.

Exclusions: Which Pension Items Are Not Affected
The increase does not apply to:

  • Pre-retirement orderly allowances
  • Monetized value of a driver or orderly allowances
  • Special additional or extraordinary pensions

Shared Pension Proportions Handled with Federal-Provincial Agreements
For pensions shared between the federal government and provincial entities, the 7% increase will be pro-rated, based on existing sharing formulas outlined in the Accounts Code.

Official Notification Establishes Separate Payment Line
According to the Office Memorandum, the 7% hike will be recorded as a distinct line item in pension statements, ensuring clarity and compliance with financial regulations.

Fiscal Relief Amid Rising Living Costs
This measure is part of broader budget support for retirees, implemented alongside a 10% ad-hoc relief allowance for current government employees, reflecting efforts to counter escalating inflation and maintain economic stability.

Implementation Plan and Disbursement Schedule
Federal agencies and pension processing centres will update payroll systems immediately. The enhanced pension amount will be visible in pension payments from July 2025 onwards, with retrospective adjustments as required.