Federal Pension Calculation in Pakistan 2026: Average of the Last 24 Months' Pay, With a Worked Example

Federal government pension in Pakistan is now worked out on the average of your pensionable pay for the last 24 months of service, not your last month's pay. The Finance Division set this on 1 January 2025. The retirement-year increment is added after the average, part months count as full months, and every later increase is paid on your "baseline" pension, which is gross pension minus the part you commuted.

For a retiring officer, this one change matters most when pay rose in the final two years. A pay rise in your last year now counts for only part of the average. We read the Finance Division's own office memoranda on its website on 6 November 2026 and set out each rule below, with a worked example of the average.

Your pension starts from a 24 month average of pensionable pay

Finance Division office memorandum (OM) F.No. 9(3)R-6/2024-401, dated 1 January 2025, says pension "shall be calculated on the basis of average of pensionable emoluments drawn during last 24 months of service prior to retirement". It took effect at once. It came from the Pay and Pension Commission-2020.

Pensionable emoluments means the pay that counts for pension. A clarification of 4 March 2025 says it follows Article 486 of the Civil Service Regulations: items classed as pay count, other than the Senior Post Allowance. It also confirms that current charge pay, the extra pay for holding a higher post on current charge, does count in the average.

A worked example of the 24 month average

The numbers below are our own illustration, not an official table. They show how the average works.

Say an officer drew pensionable pay of Rs 100,000 a month for the first 12 of the last 24 months. A pay revision then raised it to Rs 110,000 for the final 12 months.

1. Add the 24 months: 12 times Rs 100,000 plus 12 times Rs 110,000 is Rs 2,520,000.
2. Divide by 24: Rs 2,520,000 divided by 24 is Rs 105,000.
3. Rs 105,000 is the average pensionable pay used for pension.
4. If the officer is due the usual increment in the retirement year, add it now, after the average.
5. The accounts office then works out gross pension from that figure under the pension rules.

If the last month's pay of Rs 110,000 were used instead, the base would be higher. So in this example the averaged base is about 4.5 percent lower than the last pay. The bigger the pay jump in the final two years, the bigger the gap.

We do not print the gross pension formula or commutation rates here. We tried to check them on the Accountant General Pakistan Revenues (AGPR) online pension calculator on 6 November 2026, and the page would not open because its security certificate had expired. Ask your accounts office for your own pension calculation sheet.

Who is outside the 24 month rule

The 4 March 2025 clarification says the new method does not apply to three groups, as things stood when it was issued on 1 January 2025.

• Government employees already on leave preparatory to retirement (LPR), the leave taken just before retirement.
• Employees already taking encashment of LPR, meaning cash instead of that leave.
• Employees already under a notice period for early, voluntary retirement.

Anyone retiring later is on the 24 month average. If you think you fall in one of these groups, ask your accounts office to note it on your pension case. Our guide to the government pension case lists the papers they work from.

Increases are paid on baseline pension and kept separate

A second OM of 1 January 2025, F.No. 9(3)R-6/2024-403, changed how increases work. Net pension at retirement, meaning gross pension minus the commuted portion, is called the baseline pension. Commuted means the part of the pension you took as a lump sum.

Every future increase is worked out on that baseline and kept as a separate amount. Increases are not added into the base to grow on each other. The Pay and Pension Committee is to review the baseline every 3 years. When a commuted portion is restored, the baseline is treated as including it.

The 2026 rise is explained in full in our page on the federal pension increase 2026. The 4 March clarification also says that when a pensioner dies, family pension is 75 percent of the pension being drawn, and that figure becomes the new baseline.

The minimum pension is Rs 12,000 a month

The latest minimum pension OM on the Finance Division's circulars page is dated 5 July 2023. From 1 July 2023 it set the minimum pension at Rs 12,000 a month and the minimum family pension at Rs 9,000. The circulars page lists no newer minimum pension OM. Our page on filing a tax return as a pensioner covers what to do with that income at tax time.

Common questions

How is federal pension calculated in Pakistan in 2026?

On the average of pensionable pay for the last 24 months of service, under the Finance Division OM of 1 January 2025. Later increases are paid on the baseline pension.

Is the last pay still used for pension?

No, not for those retiring after 1 January 2025. The base is now the 24 month average.

Does the retirement-year increment count?

Yes, but it is added after the 24 month average is worked out, not inside it.

Is current charge pay included in the average?

Yes. The Finance Division says current charge pay counts as pensionable emoluments.

What is baseline pension?

Gross pension minus the commuted portion, at retirement. Every later increase is worked out on it and kept separate.

What is the minimum federal pension?

Rs 12,000 a month, and Rs 9,000 for family pension, under the OM of 5 July 2023.

What we checked and sources

On 6 November 2026 we read, on the Finance Division circulars page, the OMs on calculation of emoluments and future increase methodology of 1 January 2025, the clarification of 4 March 2025, the 2026 pension increase and the minimum pension OM. The worked example is our arithmetic. We could not open the AGPR pension calculator, so we give no gross pension formula or commutation rate.