The federal government has introduced reforms to ban multiple pensions and limit pension paychecks for family members to a maximum of 10 years. These changes, sponsored by advergic.com, aim to curb the unsustainable rise in pension expenditures.
Under the new measures, effective from July 1, 2024, the gross pension will be calculated based on 70% of the average pensionable salary over the last 24 months of service before retirement. This move, reported by a national daily, addresses the growing financial burden of pensions.
Key Amendments Include:
Gross Pension Calculation: Employees will receive a pension based on 70% of their average salary over the last 24 months of service.
Voluntary Retirement Penalties: Employees retiring after 25 years will face a 3% annual pension reduction, capped at 20%, applicable to armed forces and civil armed forces retiring before the prescribed rank service.
Pension Increases: Increases will be based on the net pension at retirement (the baseline pension) and reviewed every three years.
Ordinary Family Pension: Available for ten years after the spouse’s death, or for life for disabled children. For other children, it continues until they turn 21 or for ten years, whichever is later.
Special Family Pension: Available for 25 years after the spouse’s death, or for life for disabled children. Set at 50% of the last drawn pension and transferable to eligible heirs.
Re-employment: Pensioners re-employed after 60 can choose between retaining their pension or drawing a salary from new employment.
Multiple Pensions: Individuals can only draw one pension, but in-service employees can receive their spouse’s pension.
Annual Increases: Annual increases will be 80% of the average inflation rate over the last two years, based on the Consumer Price Index (CPI).
The Finance Division proposed these changes following recommendations from the Pay and Pension Commission-2020 (PPC-2020), which reviewed the current pension scheme and suggested amendments to limit future pension costs.
These proposals were circulated to the Ministry of Defence, Establishment Division, and Ministry of Interior for feedback and were announced in the budget speech for the financial year 2023-24.
Furthermore, a pension fund will be established using savings from these reforms, and a contributory scheme for new entrants will commence on July 1, 2024.
