Charter of the Economy on capacity charges, preserving a merit order of plants and using only those with lower fuel costs. These reforms are discussed in Chapter 23. Rationalization of Development Portfolio: Chapter 13 describes the recommended strategy for cost-sharing with Provincial Governments, projects which relate to performance of functions in FLL-II and handing over of projects neither in FLL-I nor in FLL-II. Further, The Federal PSDP should generally avoid projects which are intra-Provincial in nature and focus primarily on development of trunk infrastructure. Managing the Growth of Pensions: The emerging problem is the extremely rapid increase in pension payments to almost half a trillion Rs at the Federal level. Inclusive of corresponding payments by the Provincial Governments the pension bill has approached Rs 1 trillion, and it is doubling every six years. There is need first for an exercise of actuarial valuation of future liabilities. A mechanism will have to be found for a contribution scheme of superannuation both by the employee and by the Government. Implications of increase in the retirement age to 63 years will also need to be worked out. Also. As part of the increase of 25% increase in salary a part may be deducted monthly as the employee’s contribution to a Pension Fund set up by the Government. Withdrawal of Vacancies: The Federal Government has taken the appropriate decision of cancelling 70,000 vacancies in the Secretariat, autonomous bodies and attached departments. Creation of new vacancies should be avoided for at least the next three years. In addition, there is the need to study the scope for retirement of selected employees after they have completed 25 years of and attained the right to superannuation. Staggering of Future Salary Increases: The Federal Government has recently notified the grant of a so-called Disparity Reduction Allowance(DRA) at the rate of 25 percent of the basic pay scales of 2017, which would be effective for BPS 1-19 employees from March 2021. This will be admissible to all civil employees of the Federal secretariat and attached departments. It is likely to be extended to BPS 20-22 employees from July 1 onwards. The annual cost will be close to Rs 50 billon. There will be a need to consider extension of this facility also to military personnel, which will add Rs 130 billion to the cost. In addition, a further increase of 10 percent in salaries and allowances has been announced in the Federal budget of 2021-22. There have been mostly annual increases in salaries of Government employees, generally each time by 10 percent. However, the last such increase was in the Budget of 2018-19. It is estimated that due to these periodic increases the real salary of an employee will have increased by 23 percent between 2015-16 and 2020-21. This is more than the increase in real wages and salaries in the private sector. Clearly, following the recent increase there will be need for staggering a future salary increase to the budget of 2023-24 if the growth in the salary bill is to be restrained. 120