ISLAMABAD: The federal government has proposed capping the family pension of a deceased employee at ten years as part of its sweeping reforms to the pension system in budget 2025-26 to curb unsustainable public expenditures.
Finance Minister Muhammad Aurangzeb, during his budget speech in the National Assembly, announced that family pensions will now be limited to 10 years following the death of a pensioner’s spouse.
Additionally, pension adjustments would be linked to inflation through the Consumer Price Index (CPI), ensuring a transparent and data-driven increase mechanism.
The proposed policy also disallows receiving multiple pensions simultaneously. Retired individuals who take up government employment again will require to choose between drawing a pension or a salary—not both.
The reforms are part of a broader rationalisation agenda. Ten ministries have already undergone rightsizing, with six divisions merged into three.
The government also plans to privatise, merge, or dissolve 45 public sector companies and organizations.
As part of the restructuring, 40,000 government posts have been abolished. Recommendations for the next phase of rightsizing another ten ministries have also been finalised.
