The federal government has introduced the Revised Basic Pay Scales 2026 as part of Budget 2026-27, permanently merging two previously separate adhoc relief allowances into the basic pay of government employees.
Here’s a complete breakdown of what has changed, who it affects, and what it means for your salary and pension.What Exactly Has Been Merged? Two adhoc relief allowances that employees were previously receiving as separate line items on their pay slips have now been folded into basic pay: Adhoc Relief Allowance 2022 — originally granted at 15% of basic pay .Adhoc Relief Allowance 2025 — originally granted at 10% of basic pay.
Finance Minister Muhammad Aurangzeb confirmed this change in the National Assembly on June 12, 2026, with the revised structure taking effect from July 1, 2026. Employees who previously saw ARA-2022 and ARA-2025 as separate entries on their salary slips will now see those lines disappear, replaced by a single, higher basic pay figure.
How Much Does Basic Pay Increase?This is where employees need to be careful about expectations. A common assumption is that merging a 15% allowance and a 10% allowance produces a flat 25% increase — but that is not accurate.The actual net increase works out closer to 20%, because ARA-2022 was calculated on the older 2017 pay matrix while ARA-2025 was calculated on the 2022 matrix — the two percentages don’t simply add together on the same base.
Important: As of this writing, the official Finance Division notification with exact grade-by-grade, increment-stage figures had not yet been released. The percentages above are based on budget announcements and ministerial statements; employees should confirm final figures once the official notification is issued.The 7% Adhoc Relief on TopSeparately, all federal government employees from BPS-1 to BPS-22 have also been granted a fresh 7% Adhoc Relief Allowance (ARA-2026), calculated on the new, higher basic pay — meaning the 7% is applied after the RBPS-2026 merger, not on the old pre-merger basic pay.Simple example of how the calculation works:Take your old basic pay (2022 scale)Apply the RBPS-2026 merger (~20% increase) → this becomes your new basic payApply 7% ARA-2026 on top of the new basic payAdd any applicable Disparity Reduction Allowance, conveyance allowance revision, etc.Other Related ChangesA 15% Disparity Reduction Allowance continues for employees already receiving it under existing termsConveyance allowance has been increased by 50%Immigration and Passport Department employees may receive a 100% IMPAS allowance based on basic salary as of June 30, 2026Impact on PensionersFor existing pensioners, federal pensions have been increased by 7% for FY 2026-27, matching the previous year’s rate.For serving employees, the more significant long-term impact is structural: since pension is calculated on basic pay at the time of retirement, anyone retiring in 2027 or later will have their pension calculated on the new, merged (and higher) basic pay — not the old 2022 figure. This is a meaningful long-term benefit, since pension linked to basic pay compounds with every future increment.Provincial Variation: Punjab ExampleProvinces are not bound to follow the federal pension rate exactly. For example, Punjab’s Budget 2026-27 confirmed the same 7% salary increase for BPS-1 to BPS-22 employees, but set the pension increase at only 3.5% — half the federal rate.
Employees and pensioners in other provinces should check their respective provincial budget announcements, as rates may differ from the federal package.What Should You Do Now?Check your latest pay slip for your current basic pay figure (the exact “Basic Pay” line, not gross salary)Don’t rely on unofficial calculators for final figures — treat any online estimate as indicative until your Drawing and Disbursing Officer (DDO) confirms your revised basic pay under the official notificationWatch for the official Finance Division notification, which will carry the exact figures for every grade and increment stage — we will update this post once it is issued