Govt Weighs Salary, Pension Hikes in Budget Relief Plan
The federal government is reviewing a set of salary, pension and tax-relief proposals for the upcoming budget, in a move that could affect public-sector employees, pensioners and salaried households across Pakistan.
According to the report, one proposal under discussion suggests an increase of around 10 percent in salaries for government employees in the next fiscal year. Another option being examined would merge one of the ad-hoc allowances granted between 2022 and 2025 into the basic pay structure.
The proposals also include possible relief for salaried individuals earning between Rs100,000 and Rs200,000 per month. Officials are reportedly considering whether targeted tax adjustments can reduce pressure on middle-income workers facing high living costs.
Allowance-related measures are also being studied. The government is said to be looking at a 50 to 75 percent increase in conveyance allowances for officers in grades 20 to 22, while a disparity allowance for employees in grades 1 to 16 is also under consideration.
For lower and middle-grade employees, another proposal seeks to double conveyance allowances for grades 1 to 19 in response to rising fuel prices. Such a step would be aimed at easing daily travel costs for workers whose monthly budgets have been squeezed by transport and utility expenses.
Pensioners may also see a major relief package if the proposals move forward. Officials are reportedly reviewing an option to raise pensions by up to 80 percent, linked to the average inflation rate recorded over the past two years.
The government is also evaluating income tax reductions for salaried citizens with annual earnings from Rs1.2 million to Rs2.2 million. Any such change would be closely watched by taxpayers, as salary income remains one of the most documented and heavily monitored segments of Pakistan’s tax base.
The report says discussions with the International Monetary Fund are continuing over salary adjustments, tax relief and pension-related measures. Final approval is expected to depend on consultations with Prime Minister Shehbaz Sharif, the federal cabinet and financial authorities working on the budget framework.
The debate comes at a politically sensitive time, as public employees and retirees have been demanding relief from inflation while the government faces pressure to maintain fiscal discipline. Budget decisions on salaries and pensions often carry wider economic consequences because they influence government expenditure, household purchasing power and expectations in the private sector.
If approved, the measures could provide short-term relief to millions of families connected to the public sector, but they would also require careful financing. The final shape of the package will become clearer once the proposals are formally placed before the cabinet and incorporated into the federal budget plan.