Federal Government of Pakistan Announces Major Salary Relief Package in Budget 2026-27

The Federal Government of Pakistan has unveiled a significant relief package for government employees under the Budget 2026-27, bringing substantial improvements in salaries, allowances, and pension-related benefits.

Key Highlights of the Package

✅ 7% Increase in Salaries

All federal government employees will receive a 7% Adhoc Relief Allowance on their running basic pay, effective from 1st July 2026.

✅ Merger of Adhoc Relief Allowances into Basic Pay

The government has merged:

- 15% Adhoc Relief Allowance (2022)

- 10% Adhoc Relief Allowance (2025)

into the basic pay structure. This step will not only increase the basic salary but will also positively impact future increments, pensions, and other allowances linked to basic pay.

✅ 50% Increase in Conveyance Allowance

In response to rising transportation and fuel costs, the conveyance allowance has been increased by 50%, providing much-needed financial support to employees.

✅ 15% Disparity Reduction Allowance (DRA)

The government has also approved a 15% Disparity Reduction Allowance to address salary disparities among different categories of employees.

✅ 7% Increase in Pensions

Retired government employees will also benefit from a 7% increase in pensions under the new budget.

A Positive Step for Government Employees

The latest measures are aimed at easing the financial burden caused by inflation and increasing living costs. The merger of previous adhoc allowances into basic pay is particularly significant as it will have long-term benefits for serving employees and future retirees.

Government employees across Pakistan have largely welcomed these reforms, considering them a positive move toward improving compensation and financial stability.

What are your views on the Federal Budget 2026-27 salary package? Share your opinion in the comments below.

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Pension In Case of Re-Employment/ Appointment after Retirement

Punjab Government Withdraws Earlier Re-Employment Pension Restriction

The Government of Punjab Finance Department has issued an important notification regarding pension in cases of re-employment/appointment after retirement.

According to Notification No. FD.SR-III-4-82/2025, dated 04 February 2026, the Finance Department has formally withdrawn its earlier letter No. FD.SR-III-4-82/2025 dated 01 July 2025 with immediate effect from the date of its original issuance.

Key Highlights

✅ The decision has been taken pursuant to the approval of the Provincial Cabinet.

✅ The Finance Department's letter dated 01.07.2025 concerning pension in cases of re-employment or appointment after retirement stands withdrawn.

✅ The withdrawal is effective retrospectively from 01 July 2025.

✅ The notification has been circulated to all Administrative Secretaries, Commissioners, Deputy Commissioners, Heads of Attached Departments, District & Sessions Judges, Lahore High Court, Punjab Public Service Commission, Treasury Offices, and other relevant authorities.

What Does This Mean?

The withdrawal of the earlier instruction means that the policy position regarding pension entitlement for retired government employees who are re-employed or appointed after retirement will no longer be governed by the withdrawn letter dated 01 July 2025. Departments and offices across Punjab are expected to act in accordance with the revised position following this Cabinet-approved decision.

Official Details

Issuing Authority: Finance Department, Government of the Punjab

Notification Date: 04 February 2026

Subject: Pension in Case of Re-Employment / Appointment After Retirement

Signed By: Khalid Mahmood, Additional Finance Secretary (Regulations)

This development is expected to provide clarity and relief to retired government employees serving in re-employed capacities across Punjab.

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