ISLAMABAD : The government has drafted multiple proposals to increase the salaries and pensions of public sector employees and pensioners in the upcoming federal budget, with the final implementation strictly conditional upon approval from the federal cabinet and the International Monetary Fund (IMF).
According to sources close to the development, a primary proposal under consideration involves a 10% salary increase for government employees, alongside the potential merger of one of the four ad-hoc allowances granted between 2022 and 2025 into the basic pay scale.
To alleviate financial pressure on mid-income groups, the government is considering targeted relief for individuals earning between PKR 100,000 and PKR 200,000 monthly, supplemented by expected income tax reductions for those in the PKR 1.2 million to PKR 2.2 million annual income bracket.
Discussions regarding these salary adjustments and tax relief measures remain a key point in ongoing negotiations with the IMF.
The draft budget also addresses rising fuel costs by proposing to double the conveyance allowance for employees in Grades 1 to 19, while proposing a 50% to 75% increase in the conveyance allowance for senior officers in Grades 20 to 22.
Furthermore, a disparity allowance for employees in Grades 1 to 16 is being reviewed to balance income gaps.
For pensioners, authorities have proposed an increase of up to 80% indexed against the average inflation rate of the past two years.
In tandem with broader pension reforms, a proposal to induct the armed forces into a contributory pension scheme starting next fiscal year is also under evaluation.
The final framework of these proposals will be presented to the Prime Minister and the federal cabinet for formal endorsement before the official budget presentation.
