Pensioners' demands: why the pension retention period is 15 years under the 8th Departmental Commission

One year has passed since the formation of the 8th Departmental Commission (Pay Commission); it was established on November 3, 2025, and has been given eighteen months to submit its report, which is tentatively expected in May 2027. Despite the commission holding meetings with trade unions in many states, the picture regarding changes in wages and pensions remains unclear.

Nevertheless, various reports contain significant projections. In addition to salary increases, the possibility of improving the status of pensioners is actively being discussed, as a pension of 25,000 rupees could rise to 87,500 rupees after the commission's recommendations are approved.

Currently, the 8th Departmental Commission continues its meetings with trade unions, and the commission is still reviewing the demands put forward. Last October, the team visited Mumbai. On August 10, Finance Minister Pankaj Choudhary responded in Lok Sabha, clarifying that the commission has not yet submitted its recommendations. He emphasized that decisions regarding the effective date and the fitment factor will be made by the government after receiving the report.

Thus, the final determination of employee salaries, pensioner pensions, and other issues will depend on the commission's report and subsequent government decisions. Experts and reports are publishing forecasts for salary and pension increases based on organizational demands. Therefore, it is crucial to rely only on the Ministry of Finance and PIB for updates on the 8th CPC before the government makes official comments.

One of the most significant demands voiced during negotiations between the team of the 8th Departmental Commission and the trade unions is an increase in the basic rate by at least 69,000 rupees and setting the fitment factor at 3.833. This demonstrates what employees are striving for, but the adoption of these measures remains at the discretion of the government.

Although figures such as 2.57, 2.86, 3.00, and 3.15 are also actively discussed, none have received official approval. According to a recently circulated statement, the basic pension of 25,000 rupees could increase to 87,500 rupees, and this projected pension hike is based on the commission's demand for a fitment factor of 3.5. However, the government will consider the proposals presented after the publication of the departmental commission's report and then announce the amendments. Consequently, the size of the salary or pension increase entirely depends on the government.

The increase in the basic salary of civil servants affects not only the monthly earnings. The higher the basic salary, the greater its impact on annual increments, Dearness Allowance (DA), House Rent Allowance (HRA), and retirement benefits. This is why the issue of increasing the minimum basic salary and changing the annual increment rate was acutely raised before the 8th Departmental Council.

Union representatives proposed setting the minimum basic salary in the range of ₹69,000 to ₹72,000. However, these proposals have not yet received official approval.

The 8th Departmental Council held consultations with trade unions and other stakeholders on October 22 and 23, 2026, in Mumbai. A previous commission meeting took place on October 8 in Bangalore. Civil servants, pensioners, and trade unions continue to await decisions regarding new salaries, allowances, and pension provisions. In recent months, unions have brought issues such as the fitment factor, minimum basic salary, allowances, pension reforms, leave compensation, and employee morale before the commission. Special attention is being paid to increasing the basic salary, as this can affect an employee's total income throughout their career.

Unions presented various proposals to the 8th Departmental Council regarding the minimum basic salary and the fitment factor. The National Confederation of Joint Consultative Mechanisms (NC-JCM) on behalf of personnel requested a minimum basic salary of ₹69,000 and a fitment factor of 3.833. The Indian Military Technical Workers Association (BPMS) proposed a minimum basic salary of ₹72,000 and a fitment factor of 4. Both organizations cited rising inflation as the main reason for their demands. Both associations are also pushing for an increase in the current annual increment rate from 3% to 6%, arguing that this will help employees cope with inflation and increase their income. It is important to remember that the amounts of ₹69,000 and ₹72,000 are currently just proposals that the 8th Departmental Council has not finally approved.

The basic salary is the main component of a civil servant's pay, and it does not include Dearness Allowance, House Rent Allowance, or other payments. According to existing rules, the basic salary plays a key role in calculating allowances such as DA and HRA. The impact of the basic salary is felt long-term. Under the 7th Departmental Council, the annual increment is 3%. Consequently, if an employee's starting basic salary is higher, their annual increment may also be larger. This means that the higher the initial basic salary, the more positive the impact it will have on future salary.

The benefit of the basic salary can be illustrated with an example. If two employees start with different basic salaries and are subject to the same increment rate, the employee with the higher basic salary will receive a larger annual increment amount. For instance, at a 3% rate, the annual increment on a basic salary of ₹50,000 will be ₹1,500, whereas on a basic salary of ₹70,000, the same increment will be ₹2,100. Thus, the difference in the initial basic salary leads to differences in the increment amount over time, and this gap will only widen.

The consequences of increasing the basic salary are not limited to monthly remuneration. Since payments such as Dearness Allowance and House Rent Allowance are linked to the basic salary, an increase in the basic salary can lead to an increase in these allowances according to established rules. Furthermore, it may affect certain retirement benefits, including pension, dependent allowance, and leave encashment. The calculation of these payments is done according to relevant service rules and prevailing regulations, so a higher adjusted basic salary may result in an increase in these benefits.

The 8th Departmental Council was formed on November 3, 2025, and its chairman is the distinguished Supreme Court Judge Ranjan Prakash Desai. Members of the commission also include Professor Pulak Ghosh and IAS Pankaj Jain. The commission is required to submit its report within 18 months of its formation. Based on this timeframe, the report is expected to appear around May-June 2027, although this date cannot be considered final. Currently, the commission is reviewing proposals from trade unions and other parties. Precise changes in the minimum basic salary, fitment factor, and annual increment will only become clear after the commission's recommendations and subsequent government approval. Official information related to the 8th Departmental Council can be found on the website 8cpc.gov.in.

Central employees and pensioners are expecting significant increases in salaries and pensions as a result of the work of the 8th Departmental Commission (8th Pay Commission). However, the commission's task goes beyond simply increasing salaries; it must take into account the state of public finances, inflation levels, and pension expenditure.

After waiting for about ten months, the government approved the Terms of Reference (ToR) for the 8th Departmental Commission. The commission, headed by former Supreme Court Judge Ranjana Prakash Desai, will recommend changes to the remuneration, pensions, and allowances of central employees. The commission was formed in November 2025 and has eighteen months to submit its recommendations, meaning proposals may appear by May 2027, although the implementation process will take additional time.

The scope of the commission covers approximately 47 million central employees and 68 million pensioners. The exact size of the salary and pension increase is not yet known and will only become clear after the commission's recommendations are approved by the government.

There are five key economic factors that could influence the size of the salary and pension increase. Firstly, this is the state of the country's economy and the financial condition of the state. The decision on salary hikes will depend on the overall economic health, as well as the difference between government revenues and expenditures. The commission will examine aspects such as economic growth rates, inflation, and the Fiscal Deficit.

If economic activity remains high and pressure on the state budget decreases, there is potential for a more substantial salary increase. Conversely, if government spending rises and deficit control is a priority, the financial situation will play a decisive role in determining the size of the increase.

The government needs not only to increase spending on employee salaries and pensions but also to fulfill other important duties, including financing projects in road construction, railways, hospitals, education, and other areas of development, as well as implementing social welfare programs. Therefore, the departmental council faces a complex task—finding a balance between ensuring decent pay for workers and maintaining sufficient funds for government programs and development.

This is why the decision on salary increases is made not only based on staff demands or inflation levels but also considering the general financial needs of the state.

Pension expenditure is another critical factor for the 8th Departmental Commission. The state is responsible for paying pensions to employees hired before January 2004, as well as military personnel covered by the Old Pension Scheme (OPS). Salary and pension increases can raise overall state expenditure. Consequently, the commission must find a way to balance support for employees and pensioners with minimizing the burden on the state budget, taking into account current obligations and projected pension cost growth.

The recommendations of the central departmental commission are not limited to the federal level. States typically adopt or use central recommendations when changing the salaries and pensions of their employees. Thus, the 8th Departmental Council must assess the impact that changes in salaries and pensions will have on the budgets of various states. Since the economic situation and spending capacity vary across different states, understanding the financial impact of the recommendations is paramount.

A comparison of civil servant salaries with the pay levels in private companies and Public Sector Undertakings (PSUs) is also being conducted. The goal of this analysis is to determine whether government workers receive adequate compensation commensurate with their duties and workload. While this does not guarantee that the commission will recommend equating government and private sector salaries, analyzing this disparity is part of the evaluation process. The commission must make decisions considering the nature of the work, employee responsibilities, and the financial condition of the state.

An example is the 7th Departmental Commission, whose recommendations came into effect in January 2016. Under this council, a fitment factor of 2.57 was established, based on which the new salary was determined. Subsequently, periodic Dearness Allowance (DA) increases occurred. Currently, DA has reached 58% of the basic salary. Furthermore, the departmental council considers not only the basic salary but also other benefits such as House Rent Allowance (HRA), transport allowances, medical care, Travel Concession (LTC), and gratuity, meaning that the recommendations of the 8th Council could affect the total amount of payments and pensions for employees.

The commission has been given eighteen months to prepare its report, after which the government will begin reviewing these recommendations.