The relief, offered due to the rising cost of living, will apply evenly to employees in years 1 to 22.
The federal government has approved an 85% increase in the housing rent cap for federal employees, according to official sources. The decision was approved by the federal cabinet based on a summary proposed by the Ministry of Housing and Public Works.
The revised cap will apply uniformly to employees from grade 1 to grade 22, providing relief from the rising cost of living. Sources said the increase would benefit hundreds of government employees, although it was expected to impose an estimated additional annual burden of Rs 12 billion on the national exchequer.
The move is part of a broader review of government benefits aimed at adjusting pay in line with inflationary pressures and market housing rates.
Read: Here’s how much pay advances federal employees can receive under the new rules
Earlier, on Thursday, the Ministry of Finance unveiled the Federal Government Revenue and Payment Rules 2025, a new policy that entitles federal government employees to an advance for housing construction.
According to an official memorandum, employees in grades 1 to 16 are classified as “staff”, who can now get an advance for housing construction equivalent to 36 months of their basic salary. Officers of grade 17 and above will be entitled to an advance equal to 24 months of their basic salary.
The ministry said payments will be processed in accordance with the 2025 rules whenever applications for housing construction advances are submitted.
The combined reviews of benefits and loan eligibility aim to ease financial pressure on civil servants at a time of persistent inflation and soaring housing costs.
