The federal government is considering delaying the implementation of pension reforms for armed forces personnel by one year, amid rising pressure and technical concerns raised by the Ministry of Defence, official sources told media on Monday.

According to sources in the Ministry of Finance, the contributory pension system, which was approved by the federal cabinet for military employees to start from July 1, 2025, may now be postponed until July 2026. The move comes in response to concerns regarding the unique service structure and tenure of armed forces personnel, which differ from those of civilian government employees.

The contributory pension system, however, has already been implemented for new civilian employees starting July 1, 2024, as part of broader reforms to reduce the government’s pension burden.

Also Read: FinMin announces major pension reforms in budget 2025–26

Rs846bn allocated for armed forces' salaries and pensions

In the newly announced federal budget, Rs846 billion has been allocated for salaries and pensions of the armed forces. This includes:

Rs363 billion for basic salaries,
Rs482 billion for various allowances,
and a separate pension bill of Rs742 billion.

The staggering pension costs have long been a concern for policymakers, pushing the government to transition from the current pay-as-you-go pension model to a contributory system that shares financial responsibility between the employer and employee.

Teachers lose tax rebate, govt seeks IMF nod

In another key development, the government has abolished the 25% income tax rebate for teachers in the 2025-26 budget, sparking criticism from educators and parliamentarians alike.

Also Read: Finance czar says govt provides 'maximum' relief to public in 2025–26 budget

In response to the backlash, sources confirmed that the government has decided to write a letter to the International Monetary Fund (IMF), seeking approval to restore the rebate or provide alternate relief to teachers.

“Due to pressure from lawmakers and teaching associations, the government is engaging the IMF to reconsider the decision,” a senior finance official said. Meanwhile, it has also been decided to refund the income tax collected from teachers during the current fiscal year, offering some relief to the affected community.

Budget hike for Presidency, PM House

Amid austerity claims, the budgets for the Presidency and Prime Minister's House have been increased in the latest budget.

The Presidency’s budget has been raised from Rs2.26 billion to Rs2.63 billion.
The Prime Minister’s House budget has also risen from Rs1.65 billion to Rs1.75 billion, according to Finance Ministry officials.