8th Central Pay Commission: What approved Terms of Reference mean for your salary, pension and allowances

8th pay commission

The Union Cabinet on Tuesday approved the Terms of Reference (ToR) of the 8th Central Pay Commission (8th CPC), clearing the way for a comprehensive review of pay, pensions and service conditions of Central Government employees and pensioners.

The 8th CPC was announced in January 2025, and with the ToR now finalised, the Commission can formally begin its work. The recommendations are expected to come into effect from January 1, 2026, in line with the ten-year revision cycle followed.

This decision directly impacts more than 50 lakh Central Government employees and over 70 lakh pensioners, apart from employees of autonomous bodies and organisations that adopt CPC recommendations.

FAQs: How the 8th Pay Commission will impact you

What is the Terms of Reference (ToR) of the 8th Pay Commission?

The Terms of Reference (ToR) lay down what the 8th CPC must examine, evaluate and recommend. In simple terms, the ToR is like the official rulebook and scope of work for the Commission. Based on it, the Commission will study the current pay structure, compare it with economic realities, and recommend changes in salary, pension, allowances and service conditions.

As per the Cabinet announcement, the 8th CPC will:

• Review and recommend changes in the salary structure of Central Government employees.
• Examine pension revisions for retired government employees.
• Recommend measures for improved pay parity and rationalisation of pay scales.
• Suggest changes to allowances and benefits.
• Evaluate working conditions and compare them with PSUs and private sector compensation.
• Factor in the economic condition of the country and fiscal prudence.
• Evaluate the financial impact on state governments, many of which follow CPC recommendations.

• Temporary body One Chairperson
• One part-time Member
• One Member-Secretary
• The Commission must submit its report within 18 months of formation. It may submit interim reports if required.

• Central Government employees
• Defence personnel
• CAPF employees
• Railway employees
• Autonomous and statutory bodies adopting CPC
• Central Government pensioners

Historically, CPC recommendations are implemented every 10 years, starting from 1 January. Going by this pattern, the 8th CPC wages are expected to be effective from 1 January 2026.

Will the new pay commission increase basic salary?

Yes, pay commissions typically revise the basic pay by using a fitment factor. The 7th CPC used a multiplier (fitment factor) of 2.57x. Employees are expecting the 8th CPC to recommend a higher multiplier though this isn’t confirmed.

What about pensions? How will they change?

Pensioners can expect a revision in pension amount based on the new pay matrix. However, the Commission will also consider the rising pension burden on government finances while discussing the new rates.

Will state government employees also benefit?

State governments often adopt CPC recommendations with modifications. So, salary hikes may gradually extend to state employees as well.

Do employees need to apply for revised salaries?

Pay revisions are implemented through a central notification. Employees do not need to apply individually.

The Cabinet approval of the Terms of Reference means the 8th Pay Commission can officially begin its review. Over the next 18 months, it will hold consultations, analyze pay structures and submit its recommendations. Salaries and pensions are expected to increase but the final quantum will depend on economic realities and fiscal space.

For millions of employees and pensioners awaiting relief amid rising inflation, the 8th CPC brings both hope and expectation but the final outcome will balance employee welfare with economic prudence.