The federal government has withdrawn restrictions that barred retired employees from receiving both pension and salary upon rejoining government service. The decision takes immediate effect, according to an official notification issued by the Ministry of Finance.
The move provides relief to retired public servants who return to government roles after retirement and were previously required to forgo either their pension or their salary.
Key Decision at a Glance
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Policy withdrawn: Ban on receiving both pension and salary
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Applies to: Retired individuals rehired by the government
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Effective from: Immediately
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Issuing authority: Ministry of Finance
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Previous rule date: April 22, 2025
What Has Changed?
The Ministry of Finance has formally withdrawn the notification issued on April 22, 2025, which had imposed restrictions on post-retirement employment.
Under the earlier rule:
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Retired federal employees rejoining service after the age of 60
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Were required to choose between pension or salary
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Receiving both simultaneously was not allowed
With the latest decision, these conditions no longer apply.
Who Benefits from This Decision?
The policy reversal directly benefits:
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Retired civil servants rehired on contract or advisory roles
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Professionals brought back for expertise-based assignments
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Departments facing skill shortages that rely on experienced retirees
Officials say the step will help government institutions retain experienced professionals without creating financial disincentives.
Context: Pension Reforms in Pakistan
Earlier this year, the government introduced a Contributory Pension Scheme (CPS) for new public servants as part of broader pension reforms.
Key Features of the New Pension System
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Implemented in March 2025
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Aimed at controlling rapidly rising pension costs
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Pension expenditure projected at Rs1.05 trillion for FY 2024–25
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Represents a 29% year-on-year increase
Under the CPS:
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Employees cannot withdraw funds before retirement
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Up to 25% can be withdrawn at retirement
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Remaining amount is invested until 20 years post-retirement or age 80
Why the Government Reversed the Decision
Policy analysts suggest the withdrawal was driven by:
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Administrative challenges in hiring experienced professionals
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Legal and service-related complications
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Concerns over discouraging skilled retirees from rejoining public service
The revised approach balances fiscal discipline with operational needs.
Also Read: New Smart Electricity Meter Prices in Pakistan – December 2025 Update
What Happens Next?
While the restriction has been lifted, experts say:
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Pension reforms remain a long-term government priority
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New hiring will increasingly fall under the contributory system
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Further policy refinements may follow to manage pension liabilities
Departments have been advised to implement the change immediately.
Final Summary
The federal government’s decision to withdraw the ban on receiving both pension and salary marks an important policy adjustment. Effective immediately, retired individuals rehired by the government will no longer have to choose between the two.
The move offers relief to retirees while allowing government departments continued access to experienced professionals, even as broader pension reforms remain in place.
