Overview & Regulatory Framework

Leave Preparatory to Retirement (LPR), commonly known as 'Leave Encashment', is a significant financial benefit provided to civil servants under the Revised Leave Rules 1980. The Finance Division, Government of Pakistan, oversees the implementation of these rules, which allow employees to convert their unutilized earned leaves (up to a maximum of 365 days) into a lump-sum cash payment upon their superannuation. This acts as a retirement reward, ensuring that public servants are compensated for the leaves they chose not to avail during their tenure.

Official Rate Slabs & Encashment Formula

Eligibility Criteria & Qualifying Conditions

• The applicant must be a permanent government employee (BPS 1-22).
• The benefit is applicable to employees retiring on superannuation, voluntary retirement, or medical invalidation.
• Only 'Earned Leaves' are eligible for encashment; casual or sick leaves are excluded.
• The maximum limit of 365 days includes all accumulated leaves in the service book.

Step-by-Step Claim Process

1. Verify your 'Leave Account' in the service book with the department's drawing and disbursing officer (DDO).
2. Submit a formal application/request for 'Leave Encashment' three months prior to the date of retirement.
3. The DDO will process the LPR sanction order through the Accountant General (AGPR) or respective provincial accounts office.
4. Once the final notification is issued, the payment is processed alongside the pension arrears.

Required Documents Checklist

• Attested copy of the retirement notification.
• Original Leave Account ledger (duly verified by AGPR/Audit).
• No Demand Certificate (NDC) from the department.
• Last Salary Slip (Pay Slip).

Frequently Asked Questions (FAQ)

Is LPR subject to income tax?

No, the lump-sum payment received as Leave Encashment on retirement is fully exempt from income tax under the Income Tax Ordinance.

Can I encash more than 365 days?

No, the government rules strictly cap the encashment at 365 days of basic pay regardless of total accumulated leave.

How do I calculate my exact amount?

You can use our Pension Calculator and Salary Calculator on Asli Pakistan to estimate your final settlement figures accurately.