The federal cabinet has approved a 7 percent increase in salaries and pensions for government employees as part of the budget proposals for fiscal year 2026-27. The decision was taken during a special cabinet meeting chaired by Prime Minister Shehbaz Sharif in Islamabad, where draft budget documents for the upcoming financial year received formal approval ahead of their presentation in Parliament.
During the meeting, cabinet members held detailed discussions on measures aimed at providing financial relief to government employees and pensioners. Following deliberations, the cabinet endorsed a 7 percent increase in the salaries of federal government employees and a corresponding 7 percent rise in pensions. In addition, the cabinet approved the integration of the 15 percent ad hoc relief allowance granted in 2022 and the 10 percent ad hoc relief allowance announced in 2025 into the basic pay structure. This move is expected to provide long-term benefits by incorporating these allowances into employees’ pensionable salary base.
Following the cabinet’s approval, Finance Minister Muhammad Aurangzeb is scheduled to present the federal budget for fiscal year 2026-27 before the National Assembly. Addressing the meeting, Prime Minister Shehbaz Sharif thanked coalition partners for their cooperation in finalising the budget and acknowledged the support of the International Monetary Fund during the economic planning process. The meeting concluded with cabinet members expressing confidence in the government's economic strategy and support for measures aimed at maintaining fiscal stability while providing relief to public sector employees and retirees.
