There are a number of Fake News of Pension on Initial Basic Pay. There is no reality that the employees in the future will get a pension in initial or starting basic pay. The Federal or Punjab Government did not issue any such Notification. Only Punjab Government issued the Notification of Leave Encashment only on the basis of Initial basic pay of a particular basic pay scale.
Fake News of Pension on Initial Basic Pay
At this moment, the Federal Government and Punjab Government did not issue any Notification of Pension and Commute or Gratuity on the initial basic pay of the specific pay scale. The Finance Department Punjab issued a Notification Revised Leave Rules 2023 (Leave Encashment) on 01-06-2023. The employees mainly get the following benefits at the time of their retirement:
- Leave Encashment
- Pension
- Gratuity or Commutation
- 1x Basic Pay as Farewell Grant
- TA/DA (If admissible)
Leave Encashment
Federal Government employees are getting leave encashment on the basis of the last pay drawn as per the last pay certificate (LPC) at the time of retirement. Suppose an employee BPS-11 of Federal and another provincial setup except Punjab is drawing 38,300/- as basic pay at the time of retirement and the employee has one year leave in credit, then the employee will get the leave encashment as under:
Leave Encashment = Last Basic Pay x 12
=38300/- x12
= 459,600/-
However, only in Punjab as per the Notification dated 1st June 2023, the employee will get the Leave Encashment only at the initial basic pay of the pay scale. The initial basic pay is the starting basic pay of a particular pay scale and there are not included annual increments in the initial basic pay. In other words, you can say that Initial basic pay is without annual increments that the employee got every year on 1st December or special increments.
As per the new rules of leave encashment, the amount of encashment is as under:
Leave Encashment = Last Basic Pay x 12
=18650/- x12
= 223,800/-
Pension
The employee (Federal or any Provincial) on retirement is still getting a pension on the basis of the last pay drawn at the time of retirement. The pension formula is as under:
100% Pension Formula= Last Pay Drawn x Length of Service (Maximum 30) x 7/300
We further divide this pension into two parts that are 65% and 35%. The 65% is taken for further pension calculation and 35% is taken as Commute/gratuity calculation.
Commute/Gratuity
We calculate the Commute/gratuity on the basis of the last pay drawn and that is still in vogue in Federal and Provincial Governments. There is no Notification at this moment issued for the Commute/gratuity on the initial basic pay or reduced to 25% instead of 35%. If in the future Government decreases the commute ratio to 25% then the employee will get a 75% pension which is 10% more than the normal pension. However, there is no such Notification. So the employees of Federal and all provincials should not worry about the fake news of pension and commute decreases.
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