• Govt withdraws ban on drawing pension, salary upon re-employment
• Finance ministry cites ‘recruitment difficulties’ in commissions, tribunals

ISLAMABAD: In a major policy reversal amid a slight improvement in fiscal stability, the government on Friday withdrew a ban on double benefits of pension and salary for re-employed civil, judicial and military bureaucrats, introduced earlier this year and touted as a major pension reform.

The Ministry of Finance silently issued a terse notification stating that two earlier relevant orders, dated April 22 and June 19, 2025, on the subject, “are hereby withdrawn with immediate effect”.

The bureaucracy had earlier restored its perks and privileges on account of board memberships in state-owned enterprises (SOEs) ab initio, and secured executive allowances and transport monetisation allowances exceeding Rs300,000 per month on top of salaries, allowances, and other ancillary benefits.

Under the April 22, 2025, order, the government formally notified that public servants would have to choose between the new salary and pension upon rejoining the public service on a contract or regular basis after retirement.

“It has been decided that henceforth, in an event where a pensioner of the federal government after the age of 60 years, is reemployed/appointed in public service after retirement whether on regular/contract or whatsoever mode of employment, the pensioner shall have the option to retain either pension or to draw the salary of said employment during the currency of that employment,” the notification had stated.

The policy was amended on June 19 amid pressure from powerful bureaucrats, who argued that those opting to draw a salary “may face difficulties” in restoring their pensions once re-employment ended. The revised order allowed pensioners to continue receiving a pension during re-employment, provided their salary was reduced by an amount equivalent to the gross pension.

However, the pressure kept on mounting, leading to the withdrawal of both earlier notifications. This restores the old lucrative scheme under which re-hired government employees used to receive the salary of the incumbent employment, whether on contract or regular, and pension simultaneously, and, in some cases, multiple pensions.

This not only had an additional financial burden on the exchequer but also hampered the career progression of other employees.

This was part of the pension reforms the government had taken in hand to contain ever-rising pension liabilities under the IMF loan programme.

The measure allowing only salary or pension was initially announced by the then finance minister, Ishaq Dar, in the 2022-23 budget, but could not be implemented until it was reannounced by Finance Minister Muhammad Aurangzeb in last year’s budget, before the IMF signed off on a new programme.

One of the key decisions of these reforms — a contributory pension scheme for personnel of the armed forces — has already been delayed by another year to 2026, despite a notification implementing it with effect from June 2025.

When contacted, finance ministry spokesperson Qumar Sarwar Abbasi did not respond to a question about the forum that approved the latest reversal, as the earlier notifications had followed cabinet decisions and budget announcements in parliament.

He, however, said that “this specific change in relation to pensions had resulted in difficulties for the government in acquiring the services of experienced professionals for positions in various commissions and tribunals, etc, due to the reduced incentives”.

Also, this change applied to a very small number of individuals, and, in financial terms, the savings were negligible, he said. “It has, therefore, been decided to withdraw the change and restore the previous arrangement,” Mr Abbasi said.

On the other hand, the government has already introduced a contributory fund scheme for new entrants to the civil government and the armed forces of Pakistan.

In July, the government opened an unlimited financial avenue for senior bureaucrats through SOE board meetings while also imposing austerity measures on these enterprises.

Published in Dawn, December 20th, 2025