Budget 2026–27: Govt approves 7% salary and pension increase
The federal cabinet has approved a 7% increase in salaries and pensions for government employees as part of the Budget 2026–27 proposals, offering fresh relief to thousands of workers and retirees across the country.
The decision was made during a special cabinet meeting chaired by Prime Minister Shehbaz Sharif in Islamabad, where the draft budget documents for the upcoming financial year received formal approval.
During the meeting, the cabinet held detailed discussions on relief measures for government employees and pensioners, before approving a 7% salary increase and a 7% pension increase.
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The cabinet also approved merging the 15% ad hoc relief allowance introduced in 2022 and the 10% ad hoc relief allowance announced in 2025 into the basic pay structure. Following the cabinet’s approval, Finance Minister Muhammad Aurangzeb is set to present the federal budget for the fiscal year 2026–27 before the National Assembly.
Addressing the meeting, Prime Minister Shehbaz Sharif thanked the coalition partners for their support in preparing the budget and also expressed gratitude to the International Monetary Fund (IMF) for its cooperation.
The meeting concluded with federal ministers and ministers of state expressing their support for the prime minister’s economic agenda through desk-thumping.
