Government salary increase 2026-27: pay rise by grade, new pay scales and pensions

The government salary increase for 2026 in Pakistan is 7% for federal employees, paid as an Ad-hoc Relief Allowance (ARA-2026) on new Basic Pay Scales-2026 from 1 July 2026. The Finance Division notified it on 21 July 2026. Federal pensions also rose 7%. Sindh notified the same 7% allowance, KP and Balochistan announced 7%, and Punjab proposed 7% for pay and 3.5% for pensions.

Salary increase 2026 Pakistan: federal and provincial raises

We read the federal and Sindh notifications on the finance departments’ own websites. We couldn’t open Punjab’s finance department website, so Punjab’s figures come from its budget speech as Dawn reported it.

What does the 2026 salary increase notification say?

The Finance Division’s office memorandum (OM) No. F.1(2)IMP/2026 of 21 July 2026 applies to federal civil employees, including civilians paid from defence estimates:

• New pay scales. Basic Pay Scales (BPS)-2026 replace BPS-2022 from 1 July 2026. They are made by merging ARA-2022 and ARA-2025 into basic pay, so those two allowances stop.
• The raise. ARA-2026 is 7% of your running basic pay in BPS-2026, also for contingent paid staff and contract employees in pay scales.
• Frozen allowances. House rent and other allowances paid as a percentage of pay are frozen at their 30 June 2026 level. A 4 August 2026 clarification adds that ARA-2023 and ARA-2024 are frozen too.
• Your option. You had 30 days from the OM to choose BPS-2022 or BPS-2026 in writing. If you didn’t choose, you are on BPS-2026.
• Increments still come on 1 December each year.

ARA-2026 is taxable and does not count for pension or gratuity.

Salary increase chart 2026: new basic pay by grade

Minimum and maximum basic pay in the federal BPS-2026, with ARA-2026 at the minimum of each grade. The ARA column is our calculation (7% of the minimum).

BPS-2026 minimums are about 20% above BPS-2022 at every grade in the table. That rise takes the place of ARA-2022 and ARA-2025, which stopped on 1 July 2026, so it isn’t all new money. Your pay moves point to point: you sit at the same stage of BPS-2026 that you held in BPS-2022.

Worked example: how much more does a BPS-16 employee get?

Take a federal BPS-16 employee at the first stage of the scale. The parts of pay that the July 2026 OMs change:

So this employee gets about Rs 4,860 a month more from ARA-2026 and conveyance together, before tax. The full conveyance table is BPS 1-4: Rs 2,678; BPS 5-10: Rs 2,898; BPS 11-15: Rs 4,284; BPS 16 and above: Rs 7,500 a month.

To see the tax on your new salary, use our salary tax calculator. The 2026-27 slabs are in income tax slabs 2026-27.

Did pensions increase in 2026?

Yes. The Finance Division’s OM of 29 July 2026 gives federal pensioners 7% on baseline pension from 1 July 2026. It covers civil pensioners, civilians paid from defence estimates, and retired armed forces and civil armed forces personnel. It also applies to family pension and to people retiring on or after 1 July 2026.

Since 2025, the baseline pension is your net pension at retirement, and each increase is kept as a separate amount. Our guide to how government pension is calculated explains the formula and commutation.

Sindh salary increase 2026

Sindh’s Finance Department OM of 22 July 2026 follows the federal pattern. Sindh BPS-2026 merges ARA-2022 and ARA-2025 into basic pay, and ARA-2026 is 7% of running basic pay from 1 July 2026, also for contingent and contract staff. Sindh’s ARA-2025 had been 12% for BPS-1 to 16 and 10% for BPS-17 to 22. Dunya News reported a 7% pension increase in the Sindh budget.

Punjab, KP and Balochistan

• Punjab proposed a 7% pay rise and 3.5% pension increase in its budget on 16 June 2026, Dawn reported. We couldn’t check Punjab’s notification.
• KP notified new pay scales from 1 July, merging two earlier relief allowances into basic pay, with a fresh 7% ARA-2026, TechJuice reports. KP’s budget also announced 7% for pensions.
• Balochistan raised salaries and pensions 7% “on the federal model”, APP reported on 17 June 2026.

Provincial employees should check their own finance department’s notification before working out arrears.

Is the minimum wage part of the salary increase?

Not directly. The federal minimum gross salary for government employees rose to Rs 40,700, but minimum wages for private workers are set separately by each province. See our guide to the minimum wage in Pakistan.

More guides: salary tax calculator, government pension, minimum wage 2026-27, Business & Trade.