Eighth Pay Commission: The Central Government has taken a big step regarding the formation of the Eighth Pay Commission. The government has approved the Terms of Reference (ToR) of the Commission. Along with this, the Commission has been given 18 months time to prepare its report after consulting the Central Government employees and pensioners.

This decision has excited not only the 50 lakh existing central government employees but also about 68.72 lakh pensioners, who are curious to know how much their pension and salary can increase.

How will the pension amount be decided?

According to the government pensioners portal, at present there are about 68.72 lakh pensioners in various departments including Postal, Railways, Telecommunication, Defense and Civil Services. In the recommendations of the Pay Commission, pension is calculated on the basis of Fitment Factor – that is, the new salary and pension are decided by multiplying the previous basic salary by a certain coefficient.

In the Seventh Pay Commission, this fitment factor was kept at 2.57. That is, the new basic salary and pension was decided by increasing the basic salary of the Sixth Pay Commission by 2.57 times.

How much can pension increase this time?

The recommendations of the Eighth Pay Commission will be finalized only after the approval of the Union Cabinet, but it is estimated that this time the fitment factor may be increased from 2.57 to 3.0 or 3.68.

See below example of possible pension calculation –

Old Basic Salary (Rs) Fitment Factor New Basic Salary (Rs) Revised Basic Pension (50%) (Rs)
40,000 2.57 1,02,800 51,400
40,000 3.00 1,20,000 60,000
40,000 3.68 1,47,200 73,600

According to Manjit Singh Patel, national president of All India NPS Employees Federation, pensioners are not just expecting an increase in the fitment factor, but they are also demanding resolution of pending issues – such as parity in pension, regular updating process of dearness allowance (DA) and discrepancies related to medical benefits.

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