The government pension formula
For civil servants, gross pension is a fraction of pensionable emoluments that depends on qualifying service. The fraction is 7/300 for each year, which reaches 70% at 30 years:
Gross pension = pensionable emoluments × qualifying service (max 30 years) × 7 ÷ 300
Since the federal pension reforms notified at the end of 2024, pension for new federal retirees is worked out on the average of pensionable emoluments drawn during the last 24 months of service, instead of the last pay drawn. Provinces have adopted similar changes on their own timelines, so check which rule applies to your department.
Commutation: the lump sum
You may surrender (commute) up to 35% of gross pension in exchange for a one-time payment. The lump sum depends on your age next birthday, using the commutation table (number of years' purchase):
Commutation = commuted portion × 12 × years' purchase
| Age next birthday | Years purchased |
|---|---|
| 40 | 25.3728 |
| 45 | 21.7592 |
| 50 | 18.3129 |
| 55 | 15.1478 |
| 58 | 13.4340 |
| 60 | 12.3719 |
The younger you are, the larger the factor, because you give up the commuted part for longer. Superannuation cases at 60 are commonly worked out at 12.3719; confirm the factor used in your pension papers with your accounts office.
Worked example
Average pensionable pay Rs 150,000, 30 years of service, retiring at 60:
Gross pension = 150,000 × 30 × 7 ÷ 300 = Rs 105,000. Commuted 35% = Rs 36,750. Lump sum = 36,750 × 12 × 12.3719 ≈ Rs 5.46 million. Net monthly pension = Rs 68,250, plus future pension increases announced in budgets.
Minimum service and gratuity
Pension is admissible after at least 10 years of qualifying service. With less than that, the rules provide a one-time service gratuity instead of a monthly pension. Extraordinary leave, certain breaks and pre-regularisation periods may not count as qualifying service.
Pension increases
Pensions are raised in the annual budget. The federal budget 2026-27 increased pensions by 7% from 1 July 2026; Punjab announced 3.5% and Sindh 7%. Increases are applied to net pension. Use the govt salary & pension increase calculator to see the new amount.
Other retirement dues
- Leave encashment in lieu of LPR, up to 365 days on basic pay: leave encashment calculator.
- GP Fund final payment, including profit.
- Benevolent fund and group insurance where applicable.
Many retirees park part of the commutation in Behbood or Pensioners' Benefit Account for monthly income; compare returns with the National Savings profit calculator.
Frequently asked questions
How is government pension calculated in Pakistan?
Gross pension = pensionable emoluments × qualifying service (up to 30 years) × 7/300. At 30 years it equals 70% of pensionable pay.
How is commutation calculated?
Commuted portion (up to 35% of gross pension) × 12 × the years-purchased factor for your age next birthday from the commutation table.
Is pension now based on the last 24 months average?
For federal employees retiring after the 2025 reforms, yes: average pensionable emoluments of the last 24 months. Check your province's notification.
What is the minimum service for pension?
10 years of qualifying service. Below that a service gratuity is paid instead.
How much did pensions increase in 2026-27?
Federal pensions increased by 7% from 1 July 2026. Punjab announced 3.5% and Sindh 7%.