Punjab Government Ends Pension 2025 | New Ordinance Declares Pension a Financial Burden. The Punjab Government has officially ended the pension scheme for government employees, declaring that pension payments have become a heavy burden on the national treasury. A new law titled the “Punjab Regularization of Service (Repeal) Ordinance 2025” has been approved by the Governor of Punjab and enforced immediately.
This new ordinance repeals the Punjab Regularization of Service Act 2018, which had earlier allowed thousands of contract employees to become permanent government staff with benefits such as pension, annual increments, and job security.
What Was the Punjab Regularization of Service Act 2018?
The 2018 Act was originally introduced to provide stability and fair treatment to government workers who had been serving for years on contract or temporary basis. Under that law:
- Contract employees were made permanent (regularized).
- They gained access to pension rights, annual increments, and service protection.
- Thousands of employees across Punjab benefited from this reform.
However, in 2025, the Punjab government decided to abolish the act entirely, changing the structure of government employment and financial planning in the province.
What Is the Punjab Regularization of Service (Repeal) Ordinance 2025?
The Punjab Regularization of Service (Repeal) Ordinance 2025 completely cancels the 2018 Act. This means that no future regularizations will be made under the old law.
| Provision | Description |
|---|---|
| Name of the Law | Punjab Regularization of Service (Repeal) Ordinance 2025 |
| Approved by | Governor of Punjab |
| Repeals | Punjab Regularization of Service Act 2018 |
| Effective Date | Immediately upon publication |
| Purpose | To shift government hiring to Lump Sum Pay Package and reduce pension-related burden |
| Impact | No more permanent jobs under BPS (Basic Pay Scale) |
| Exception | Employees already regularized under the 2018 Act will retain their status |
Why Did the Punjab Government Repeal the 2018 Act?
The government has stated that pension liabilities are consuming a major share of the provincial budget. With rising economic pressure and limited fiscal space, the administration believes it can no longer sustain lifetime pension payments for a large number of retired employees.
- Financial Burden: Pension payments are costing billions annually, creating pressure on the public treasury.
- Fiscal Discipline: Shifting to a lump-sum salary structure helps maintain better financial control.
- Modernization of Pay System: The government wants to implement a performance-based system rather than the traditional Basic Pay Scale (BPS) system.
What Is the New Lump-Sum Pay Package System?
The Lump-Sum Pay Package replaces the traditional Basic Pay Scale (BPS) system. Under this new policy, all new employees will receive a fixed monthly salary without long-term government obligations such as pensions or annual increments.
| Feature | Old System (BPS) | New System (Lump-Sum Pay) |
|---|---|---|
| Job Type | Permanent | Contractual |
| Pension | Available | Not available |
| Annual Increment | Yes | No |
| Service Security | Lifetime | Fixed-term |
| Allowances | Included | May vary |
| Hiring Basis | Through Regularization & BPS | Direct Contract (Fixed Pay) |
This move will significantly reduce future pension obligations but also limit long-term job benefits for new employees.
What Happens to Already Regularized Employees?
The government has clarified that employees who were regularized before this ordinance will not lose their permanent status. Their jobs, benefits, and pensions will remain safe and unaffected.
Protection Clause
The ordinance includes a protection clause stating that:
“Any appointment or action already completed under the Punjab Regularization of Service Act 2018 shall remain valid and unaffected by this repeal.”
This means only new contract or temporary employees will be affected going forward.
Impact on Future Hiring
With the new ordinance in effect, the Punjab government will no longer offer permanent jobs under BPS. Instead, all future recruitment will be made on lump-sum pay contracts, eliminating the concept of pension and long-term service benefits.
Expected Changes in Hiring:
- New jobs will be offered on fixed pay only.
- No automatic regularization after years of service.
- Performance and project-based hiring will become more common.
- Employees will not receive retirement pensions or gratuities.
This marks a major policy shift in Punjab’s administrative structure and may influence other provinces to adopt similar models.
Government’s Perspective: “Reducing Financial Pressure”
According to Punjab officials, the government spends a large portion of its annual budget on pensions and post-retirement benefits. This leaves limited funds for development projects, salaries, and public welfare schemes.
By implementing the Lump Sum Pay Package, the administration aims to:
- Reduce recurring liabilities.
- Improve budget management.
- Prioritize active development spending over pension obligations.
The policy is presented as a reform step for sustainable governance rather than a cost-cutting measure.
Public Reaction and Employee Concerns
While the government highlights financial sustainability, the decision has sparked strong criticism from employee unions and civil society.
Concerns Raised:
- Lack of job security for future employees.
- End of pension and lifetime benefits.
- Fear of exploitation under contractual employment.
- Rising uncertainty among existing temporary staff waiting for regularization.
Many employees argue that pension is not a privilege but a right, earned through years of dedicated service. They have called for protests and legal reviews of the new ordinance.
Legal and Administrative Implications
With the repeal of the 2018 Act, government departments must update their hiring rules, HR policies, and financial forecasts.
- All new recruitment notifications will follow the Lump Sum Pay model.
- Service structure revisions will be required in each department.
- Future court cases may arise from employees challenging the ordinance.
Conclusion
The Punjab Regularization of Service (Repeal) Ordinance 2025 marks a turning point in public sector employment. While the government views it as a step toward financial stability and modernization, critics believe it undermines the welfare and motivation of government employees.
For now, existing regularized employees remain safe, but the future of new government recruitment will operate entirely under lump-sum pay contracts, with no pension benefits and limited job security.
This major reform signals a new era of cost management in Punjab’s public administration — one that prioritizes fiscal control over traditional job guarantees.
