An employee counts Pakistani rupee notes at a bank in Peshawar, on August 22, 2023. — Reuters

ISLAMABAD: The federal government has decided to increase the salaries of its employees by up to 25%, Federal Minister for Finance Muhammad Aurangzeb said Wednesday.

The minister said this as he presented the federal budget for FY25 in today’s National Assembly session.

During his budget speech, Aurangzeb said that the government would adopt a three-pronged strategy to reform the pension scheme in line with international best practices.

He said that the government had to pay unfunded pension liability, which was increasing every year. He said after reforms in the pension scheme, the pension liability would be reduced considerably in next three decades.

The minister said that for fresh employees, a contributory pension scheme would be introduced for which the government would deposit its share every month.

Moreover, a pension fund would be created to manage the liability, he added.

He proposed a 20-25% increase in the salaries on ad-hoc basis and 15% enhancement in the pensions of the federal government employees, realising their financial hardships due to the increased inflation.

The minister said despite financial constraints, the government had decided to give 25% ad-hoc relief in the salaries of employees from Grade 1-16 and 20% to Grade-17-22 employees aimed at increasing their purchase power.

He also announced to increase the minimum wages from existing Rs32,000 to Rs 36,000 per month.

The sources said that the federal cabinet had given go-ahead to a proposal for a 25% salary increase for federal government employees and a 15% pension increase in the federal budget for 2024-25. 

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