What are the new changes in public pension system? The Ministry of Finance has suggested a number of important changes to revamp the pension system for former public sector workers.
The proposals include altering the basis for calculating pensions, lowering the commutation formula, and modifying the duration of pension eligibility for specific groups of pensioners; however, members of the armed forces and the defence are exempt from these changes.
The pension computation under the proposed amendments would utilize the average of the last three years’ worth of salaries rather than the latest drawn pay, as it is currently done.
What are the new changes in public pension system?
The commutation formula, which sets the lump sum payment upfront amount upon retirement, would be reduced to 25%, and the remaining 75% would be paid in monthly payments during the ensuing years.
The old system had a retirement contribution of 35 percent and a post-retirement contribution of 65 percent.
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Additionally, the pension period for some groups of pensioners would be capped at ten years, as opposed to the current lifelong entitlement, such as daughters who are widowed, divorced, or unmarried.
Families of the Shuhada would be exempt for 20 years, and their crippled children would be eligible for lifetime pension payments.
