Sindh’s New Pension Policy Sparks Anger: 600,000 Families at Risk

Dr Tauseef Ahmed Khan

The Sindh government, under pressure from international financial institutions, has decided to reduce pension-related benefits for its employees, effectively aligning its policies with the principles of neoliberalism. Around 600,000 employees of the Sindh government are protesting against this decision.

A review of the provincial government’s notification dated August 16, 2025, shows that at the time of retirement, your basic pension (excluding the commuted portion) will be termed the “Baseline.” Annual increases will apply only to this “Baseline,” not to allowances. Past increments will not be merged into the basic pension, meaning real income could decline over time. Moreover, instead of the last drawn salary, the pension will now be calculated on the average of the last 24 months’ salary, which could reduce the final amount if there was a promotion or raise in the final months.

Previously, the commuted portion was restored after 15 years, but this notification does not clarify the matter, leaving a significant ambiguity that requires explanation from the government. Furthermore, only widows/widowers, disabled children, and in some cases, parents will be eligible for family pension. A married female employee may choose not to include her husband as a beneficiary. Pension benefits will cease once eligibility ends (for example, if a widow remarries or a disabled child recovers), and dual family pensions will not be permitted.

The notification further states that every applicant must provide a written certificate confirming they are not receiving pension or gratuity from any other government. According to another Sindh government notification dated July 31, 2025, employees will lose several benefits traditionally associated with public service. Haji Muhammad Ashraf Khaskheli, chairman of the Sindh Employees Alliance, said that about 600,000 families would be affected by this decision.

SEA leaders also pointed out that while the notification does not explicitly mention a 63.5% cut in allowances, the Baseline method could reduce future pension increases, and calculating pensions on a 24-month average could further lower the amount. The ambiguity surrounding commutation restoration raises strong possibilities of a reduction in the commutation formula in the future.

The Sindh government has effectively secured the authority to limit pension increases going forward. Another major blow to employees is the denial of dual pensions. The government has defined dual pensions as cases where both husband and wife are employees of the Sindh government—in such cases, only one will be entitled to full pension after retirement. This is a clear violation of human rights clauses enshrined in the Constitution.

Worldwide, when spouses work in the same organization, they receive salaries and full benefits, and after retirement, both are entitled to pensions. It will be absurd if in Sindh, a husband and wife who have each served for 30 years, working day and night, are left with reduced financial support in old age when illnesses and hardships mount.

Analyzing this policy, SEA chairman Ashraf Khaskheli noted that the government has reduced the commutation/gratuity allocation from 63.5% to 15%. Under this new formula, employees’ pensions will suffer a 47% deficit. Newly recruited employees will not receive pensions at all. Meanwhile, the federal government has set the Disparity Reduction Allowance at 70%, Balochistan and Khyber Pakhtunkhwa at 60%, and Azad Kashmir at 60% as well, but the Sindh government has remained silent on the issue.

The Pakistan Peoples Party (PPP) once envisioned the creation of a social welfare state. On this manifesto, it distinguished itself from right-wing religious and other political parties. Zulfikar Ali Bhutto raised the slogan of “Roti, Kapra, aur Makan” (Food, Clothing, and Shelter). The PPP’s foundational documents promised comprehensive reforms across all sectors.

During its first government, PPP implemented reforms in every sector. For the first time, the state recognized every citizen’s right to education and healthcare. Land reforms were carried out, and a new labor policy was introduced for the welfare of workers. For government employees, a career path was established from Grade 1 to Grade 22. College and university teachers were given a minimum entry at Grade 17, while a clear promotional path up to Grade 22 was also outlined for school teachers. These reforms had a positive impact on national development.

During General Zia-ul-Haq’s regime, the policy of privatization was adopted, and national industries began to be sold to the private sector. IMF experts started advocating that pensions were a burden on the state and should be abolished.

PPP and later the Muslim League governments resisted IMF’s call to end pensions, but under the banner of public-private partnerships, educational institutions and hospitals were gradually handed over to the private sector. Privatization drives focused on transport institutions like PIA and Railways. In every budget, proposals to reduce pensions were discussed. Finance Ministry officials argued that pension allocations were increasing the budget deficit—a claim many considered irrational. Due to pressure from employees, these proposals were never fully implemented.

The tragedy of history is that the PPP, once popular for its stance against exploitation, is now attempting to take away the livelihoods of pensioners. If Sindh government enforces this notification, public sector jobs will lose their appeal, and talented youth will prefer private sector opportunities, overseas employment, or resort to illicit means of income during service.

This is not just about the future of 600,000 families of Sindh government employees—it is about the strength of the government’s entire institutional framework. Sindh government employees, from university professors to clerks, oppose this policy. By cutting benefits for the poor, the Sindh government is eroding its own popularity. PPP leadership must realize that pensions are a right, not a concession.