Federal Government Announces 7% Pension Increase

The Finance Division has officially declared a 7 percent increment in pensions, effective from July 1, 2025. This increase applies to all civil pensioners of the Federal Government, encompassing civilians paid from defense estimates, retired armed forces personnel, and civil armed forces personnel.

An official memorandum released by the Finance Division stated that the President has approved a 7% increase in the net pension for the aforementioned pensioners, commencing on July 1, 2025.

The 7% pension raise will also be applicable to individuals retiring on or after July 1, 2025.

This enhancement extends to family pensions granted under the Pension-cum-Gratuity Scheme of 1954, the Liberalized Pension Rules of 1977 (as amended), pensions sanctioned under the Federal Civil Services (Extraordinary Pension) Rules, and Compassionate Allowance under CSR-353.

For determining the increase, “net pension” is defined as the pension amount drawn on June 30, 2025, minus any medical allowance. This adjusted pension will serve as the baseline for calculating current and future increments.

The increase will be recorded separately, as per Finance Division O.M. No.9 (3)R-6/2024-403 dated January 1, 2025.

In cases where the gross pension is shared with another government, the pension increase will be proportionately divided between the Federal Government and the concerned government, following the rules outlined in Part-IV of Appendix-III to the Accounts Code, Volume-I.

This pension increase will not be applicable to Special Additional Pension provided in place of pre-retirement Orderly Allowance, or the monetized value of a driver or an orderly.