Major Pension Reforms. Govt Revises Calculation Method and Imposes New Rules

The government has introduced major reforms in pension calculations, altering the formula used to determine retirement benefits and enforcing new restrictions on eligibility.

As per media reports, a notification issued on Wednesday detailed the modifications, including a transition from final salary-based pension calculations to an average of the last 24 months’ earnings. Furthermore, employees will now be prohibited from receiving multiple pensions.

The notice also clarified that these changes will not affect employees opting for voluntary retirement. Additionally, any incremental salary increases during the final service year will no longer be factored into pension calculations.

For existing pensioners, the pension increment mechanism has been adjusted, including a revision in the way family pensions are computed—now based on net pension values instead of previous methods.

It was further specified that any partial month worked before retirement will be counted as a full month for pension calculations. The government emphasized that these reforms are aimed at ensuring uniform pension policies and maintaining long-term financial sustainability.