The federal government has officially issued a notification announcing a 7% increase in the pension of retired employees, effective July 1, 2025, according to the Ministry of Finance.

The raise applies to all retired civil, military, and civil armed forces personnel, including those who retire on or after July 1. The hike will also benefit recipients of family pensions under the Pension-cum-Gratuity Scheme.

According to the notification, the net pension amount up to June 30, 2025, will now be considered the “base pension” for calculating future revisions.

In addition to the pension increase, the government has also issued notifications for:

30% Disparity Reduction Allowance for federal employees
10% Ad Hoc Relief Allowance for serving federal government staff

The Ministry of Finance confirmed that all notifications have been issued with the approval of the president.

Also Read: 10% salary increase for govt employees approved

On June 10, the finance minister had announced during his budget speech that the salaries of government employees would be hiked by 10% and pensions by 7%.

The pay raise was applicable to employees in grades 1 to 22. It was also decided to provide a 30% hardship reduction allowance to eligible employees.

Moreover, the minister had also announced a special relief allowance for officers and soldiers of the armed forces, which was to be met from the defense budget of the financial year 2025-26. A special conveyance allowance for special employees was also announced and an increase in special conveyance allowance from Rs4,000 to Rs6,000 per month.