Employees Corner
Notification: Calculation of Emoluments for Pension Purpose (Federal 2025)
The federal government has introduced a revised method for pension calculation, effective from 2025. Under the new pension reforms, the average basic pay of the last 24 months before retirement will now be used for pension calculations. This marks a departure from the previous system, where the last basic pay at retirement was taken into account.
Pension Calculation Table
| Sr. No | Duration/Period | Total No. of Months | Basic Pay (Rs.) | Total Pay (Rs.) |
|---|---|---|---|---|
| 1 | Jan 2023 to Nov 2023 | 11 Months | 129,300 | 1,422,300 |
| 2 | Dec 2023 to Nov 2024 | 12 Months | 133,560 | 1,602,720 |
| 3 | Dec 2024 | 01 Month | 137,820 | 137,820 |
| 4 | Total | 24 Months | 3,162,840 | |
| Average | 131,785 |
Calculation Steps
Step 1: Total Pay Calculation
- Jan 2023 to Nov 2023 (11 Months):
- Rs. 129,300 × 11 = Rs. 1,422,300
- Dec 2023 to Nov 2024 (12 Months):
- Rs. 133,560 × 12 = Rs. 1,602,720
- Dec 2024 (1 Month):
- Rs. 137,820 × 1 = Rs. 137,820
Step 2: Total Pay and Months
- Total Pay: Rs. 1,422,300 + Rs. 1,602,720 + Rs. 137,820 = Rs. 3,162,840
- Total Number of Months: 24
Step 3: Average Pay
- Average Pay = Total Pay ÷ Total Months
Rs. 3,162,840 ÷ 24 = Rs. 131,785
Thus, the average basic pay of the employee is Rs. 131,785, which will be used for pension purposes.
Key Changes in Pension Calculation
- New Rule: The average basic pay of the last 24 months will now serve as the basis for pension calculations.
- Previous Rule: Earlier, the last drawn basic pay at retirement was used to calculate pension benefits.
This reform ensures a more balanced and transparent approach to pension calculations, aligning with the government’s broader financial management objectives.
