Salary cuts to pay for K-P employee pensions

The Khyber-Pakhtunkhwa government has decided to amend the pension policy for the third time in the three years of its rule in order to reduce the province’s financial burden.

In this regard a 17-point policy has been finalised under which deduction will be made from the salaries of the newly recruited government employees. This amount will go to Contributory Pension Fund. The employees of Pakistan Administrative Service and PMS officers have agreed to contribute 20 percent of their salary raise towards the pension fund.

Finance Minister Taimur Saleem Jhagra has shared on his twitter handle that in the past 17 years the size of the pension in K-P has registered a 95-time increase. He said that in 2003 the total size of the pension was Rs870 million which reached Rs83 billion in the current fiscal year.

In the past it was just 1.13 percent of the total budget and it has grown to 13.4 percent of the total budget outlay this year. If no action is taken to bring it down it will outgrow the provincial financial resources in the coming six years,” he claimed, adding that till 2030 the total amount of pension could increase to Rs460 billion because there is a 22 percent increase in the strength of public sector employees in the past five years.

“Before reforms pensioners were receiving it on 13 levels including widows, sons, unmarried daughters, daughter in law, orphan grandson, granddaughter, father, mother, brother and widowed sisters,” he said, adding that each year around 5,000 employees – most of them teachers – retire at the age of 45 with full pension benefits and they also start working in private sector which has been an extra burden on the provincial exchequer.

The finance minister claimed that Rs1,000 billion is required to pay all these pensions in the future, adding that the number of children eligible to get pension will be reduced taking into account the international best practices. He said that the amount saved will thus be used to increase the pension for widows from 75 percent to 100 percent.

Jhagra said that the minimum age of retirement has also been increased for the government employees from 45 to 55 which will save the government Rs12 billion in the first year.

The minister claimed that the total saving will amount to Rs150 billion in 10 years, adding that no employee could claim double salary or pension anymore.

Under the pension reforms, all newly recruited public sector employees have been bound to contribute in the newly established ‘Contributory Pension Program’ while the existing employees have been given an option. This will, he claimed, enable the government to pay pension to nearly 100,000 employees of the companies, authorities and MTIs.

The minister further revealed that the profit on the pension fund could also be used for the payment of pension and it has been approved by the provincial cabinet.


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