Leave Encashment (LPR) Rules on Retirement in Pakistan: 365 Days Basic Pay Formula & Encashment Calculation
Published on Asli Pakistan (aslipakistan.com) • 12 November 2026
Overview & Regulatory Framework
Leave Preparatory to Retirement (LPR) encashment is a terminal benefit provided to government employees under the Revised Leave Rules 1981. This benefit is governed by the Finance Division and processed by the AGPR (Accountant General Pakistan Revenues) or provincial account offices. Recent notifications have clarified that employees can opt to encash their leave instead of availing the full 365-day LPR period, effectively allowing them to continue working until the age of superannuation while receiving a lump sum payout.
Official Rate Slabs & Calculation Formula
The encashment is calculated based on the employee's last drawn basic pay. If an employee has a balance of earned leave, they can encash up to a maximum of 365 days.
| Description | Basis of Calculation |
|---|---|
| Encashment Limit | Maximum 365 Days |
| Calculation Basis | Last Drawn Basic Pay |
| Allowances Included | None (Only Basic Pay) |
| Taxability | Exempt from Income Tax |
Eligibility Criteria & Qualifying Conditions
- The employee must be a regular government servant (BPS 1-22).
- The employee must have a credit of earned leave available in their account.
- An option to encash must be submitted to the competent authority at least 30 days before the intended date of retirement.
- Employees under suspension are not entitled to encashment until cleared.
Step-by-Step Claim Process
- Verify your leave balance through your department's DDO (Drawing and Disbursing Officer).
- Submit a written application to your department head expressing your intent to encash LPR.
- Ensure the service book is updated and leave records are audited.
- The department issues a 'No Demand Certificate' and processes the case to AGPR/Account Office.
- Upon approval, the amount is credited to your bank account along with final pension dues.
Required Documents Checklist
- Formal Application for Leave Encashment
- Updated Service Book and Leave Account
- No Demand Certificate (NDC)
- Last Pay Certificate (LPC)
- Copies of CNIC
Frequently Asked Questions (FAQ)
Does LPR encashment include allowances?
No, the encashment is strictly calculated on the basis of the current Basic Pay only. Other allowances like HRA or medical allowance are excluded.
Can I encash more than 365 days?
No, the maximum limit for encashment is 365 days of earned leave. Any balance exceeding this is not payable.
Where can I verify my potential payout?
You can use our Salary Calculator and Pension Calculator to estimate your retirement benefits effectively.
Calculate Your Exact Pension & Lump-Sum Payout
Plan your retirement with 100% accuracy using our official Finance Division calculators for monthly pension and 35% commutation cash payout.