Government of Pakistan Finance Division (Regulations Wing) issued a Notification on 01-01-2025 in connection with the Calculation of Emoluments for Pension Purpose for Federal employees/pensioners. The details are as follows:
Calculation of Emoluments for Pension Purpose for the Federal
As per the Notification of the Finance Division on 1st January 2025, the undersigned is directed to refer to the subject noted above and to state that, on the recommendations of Pay and Pension Commission 2020, it has been decided that henceforth, Pension shall be calculated based on the average of pensionable emoluments drawn during last 24 months of service before retirement.
Existing instructions on the subject shall stand amended to the extent above with immediate effect.
Explanation
Pensionable emoluments
The pensionable emoluments are the amounts included in Pension calculation. Generally, it is basic pay. It may be basic pay, special pay, personal pay (PP), usual increments, or any other kind of pay. It does now include any allowance except Orderly Allowance (Ardaly Allowance).
Average of Last 24 Months’ emoluments
The average will be counted for the last 24 months’ basic pay. The calculation will be simple. For example, an employee of BPS-18 retired on 31st December 2025 with a Basic Pay of Rs. 137,820/-. If there is no unexpected change in basic pay, then the average basic pay will be as follows:
| Sr. No | Duration/Period | Total No of Months | Basic Pay | Total Pay |
| 1 | Jan 2023 to November 2023
|
11 Months | 129300 | 1,422,300/- |
| 2 | December 2023 to November 2024
|
12 Months | 133560 | 1,602,720/- |
| 3 | December 2024
|
01 Month | 137820 | 137,820/- |
| 4 | Total | 24 Months | 3,162,840/- | |
| Average | =3,162,840/24 | = 131,785/- Average Pay |
Step 1: Total Pay Calculation
Jan 2023 to Nov 2023 (11 months)
129,300×11=1,422,300
Dec 2023 to Nov 2024 (12 months):
133,560×12=1,602,720
Dec 2024 (1 month):
137,820×1=137,820
Step 2: Total Pay and Months
Total Pay = 1,422,300+1,602,720+137,820
=3,162,840
Total Months = 24
Step 3: Average Pay
Average Pay=Total Pay/Total Months=3,162,840 /24=131,785/-
So the average pay of the employee is Rs. 131,785/- for pension purposes.
Previously before the introductionn of new pension rule / reforms in 2024, the last basic pay at retirement was taken to calculate pension. Now the average basic pay for the last 24 months before retirement will be taken for pension calculation.
