The federal government has approved an 85 percent increase in the house rent ceiling for federal employees across all grades, from Grade 1 to Grade 22. Following cabinet approval, an official notification has been issued to implement the revised rent ceiling. The decision, based on a summary presented by the Ministry of Housing and Works, aims to provide financial relief to government workers facing rising living costs.
The increase will apply uniformly to all federal employees stationed in major cities, including Islamabad, Rawalpindi, Lahore, Karachi, Peshawar, and Quetta. According to official sources, the adjustment is expected to cost the national exchequer approximately Rs. 12 billion. The Ministry of Housing and Works emphasized that rents in urban centers have risen sharply, making it increasingly difficult for employees to find suitable accommodation under the previous rent limits. The last revision to the house rent ceiling took place on September 28, 2021.
In a separate development, the federal government has also launched a new pension scheme for federal employees and members of the armed forces. The move aims to ease the financial burden of the existing pension system on the national treasury. The new contributory pension scheme requires both the employee and the government to share contributions to the pension fund.
Under the new structure, a total of 22 percent will be contributed to the pension fund — with 10 percent from employees and 12 percent from the government. The Ministry of Finance has already issued a notification to formalize the scheme, and the government has allocated Rs. 10 billion to establish the new pension fund.
The revised pension system will not affect current government employees. It will apply only to those recruited after July 1, 2024, while members of the armed forces will transition to the new plan starting July 1, 2025.
