PESHAWAR: The Khyber Pakhtunkhwa government will transition from the unfunded pension scheme to a funded one by 2045 after all employees hired under the former are expected to retire, show official documents.

The unfunded pension scheme for government employees was replaced by a contributory pension system in 2022.

While unveiling the next budget a few days ago, the provincial government announced a 10pc pay raise for its current employees and seven per cent pension hike for former employees in 2025-26.

In monetary terms, the increase will take the province’s pay and pension bill to a whopping Rs875 billion-Rs680.39 for salary and Rs194.97 billion for pension-which makes up 41pc of the total budget outlay of Rs2.12 trillion.

The document states that the pay and pensions constituted the largest part of the government’s expenditure.

Pay, pensions dominate govt expenditure

“The rising cost of pensions and salaries has limited fiscal space for other priorities particularly the development budget........

© Dawn Business