The Punjab government has abolished the annual pension increase for retired public servants.

The Punjab finance secretary has through a letter directed all departments to take steps to stop the increase in pension.

The finance department's decision, which applies to three types of pensions, was formally communicated through a notification issued on Tuesday.

pension notification

The directive, signed by Punjab Finance Secretary Mujahid Sherdil, has been sent to all administrative secretaries and department heads, instructing them to implement the new order immediately. According to the notification, the ban on pension increases will apply to all employees retiring from service starting today - December 3.

According to the notification, the pensions of those who seek voluntary retirement would also be deducted.

A 59-year-old person who retires soon will have a 2% reduction in his pension, while a 58-year-old person's pension will be reduced by 4%, a 57-year-old person's pension will be reduced by 6%, a 56-year-old person's pension will be reduced by 8% and a 55-year-old person's pension will be reduced by 10%, the notification added.

pension notify

"All departments should take steps to halt the increase in pension under the new notification," the secretary has said in the letter.

Also Read: Govt mulls reducing retirement age by 5 years

Just a day ago, the federal government reportedly considered a proposal to lower the retirement age for government employees by five years in a bid to reduce the mounting pension burden. The government is considering lowering the average retirement age from 60 to 55 years.

The proposal, reportedly suggested by the International Monetary Fund (IMF), is still under review with the federal authorities weighing its potential financial and legal implications. The primary objective behind this decision is to reduce the pension expenditure, which has surged to alarming levels in recent years.

According to sources, this move could save the government up to Rs50 billion annually if implemented across all government institutions. Currently, government employees are entitled to a pension based on their last drawn basic salary at the age of 60, or, in certain cases, after serving a maximum of 30 years.