8th Pay Commission News: FM Nirmala Sitharaman's big update on defence vs civil pensioners

According to an FE report, the new commission is expected to finalise its recommendations within 15 to 18 months of its formation. It may also submit an interim report before presenting its final recommendations, but the complete report is likely to be released only by the end of 2026, another source stated.

The commission's term will officially begin in January 2026, but the revised salary and pension adjustments may not be implemented until early 2027, according to the FE report. However, once the new pay scale is enforced, employees and pensioners will receive arrears for the entire 12-month period.

According to a Finance Express report, central government employees and pensioners anticipating a salary and pension hike from January 2026 may have to wait an additional year. This delay is attributed to the extended timeline expected for implementing the recommendations of the 8th Pay Commission.

The central government has sanctioned a 2% increase in Dearness Allowance (DA) for its employees. This raise will elevate the DA from the current 53% to 55% of their basic pay. Notably, since DA is revised every six months, this hike will also lead to an increase in other salary components like House Rent Allowance (HRA) and Travel Allowance (TA).

I again reiterate that this is only a Validation of existing rules. This DOES NOT alter or change existing civil or defense pension. - Nirmala Sitharaman in Parliament

• All Central Government pensioners who retired before January 1, 2016, now receive pensions equivalent to those who retired after that date.
• Based on the recommendations of the 6th Central Pay Commission (CPC), a distinction among pensioners is unavoidable. This differentiation is being introduced through an amendment and subsequent validation.
• However, the validation rules do not alter or impact the pension amounts already determined for existing Civil Pensioners. Their pensions remain unchanged at their current levels.
• Additionally, these validation rules have no effect on Defense Pensioners, as they are governed by a separate set of regulations.
• This is not a modification of any existing pension rules or guidelines but rather a reaffirmation of the principles established since June 1, 1972, when the CCS (Pension) Rules were first implemented.
• The 6th CPC had originally created a distinction between pensioners who retired before January 1, 2006, and those who retired afterward.
• At that time, the Congress-led UPA government accepted the 6th CPC's recommendations and enforced a separation of pensioners based on the January 1, 2006, cut-off date.
• With the implementation of the 7th CPC, parity has now been established between pensioners who retired before and after January 1, 2016.

Welcome back to our live coverage for the announcement for 8th Pay Commission. Over the weekend, we saw the Centre raising the DA by 2 percent for the government employees. Union Finance Minister Nirmala Sitharaman also made a statement regarding the benefit for pensioners. Stay with us for latest updates, timelines and more

In simple terms, fitment factor is the basis on which the salary revisions are calculated. At present, the 7th Pay Commission, that guides the salary structure of all central government staff, has the fitment factor of 2.57. Several officials have said that the 8th Pay Commission must have the fitment factor of 2.57 or above. Many reports say that the 8th Pay Commission may see the fitment factor increasing to 3. In case that happens, central government staff may see a hefty salary revision.

International brokerage Goldman Sachs said that Maruti Suzuki, Eicher Motors and TVS Motor, along with automotive systems supplier Uno Minda, are likely to benefit from the rise in the disposable income of central government employees after the implementation of 8th Pay Commission.

The tenure of 7th Pay Commission will end in 2026. The fitment factor for 7th Pay Commission is 2.57.

The countdown has begun for the final announcement regarding the constitution of 8th Pay Commission by the Centre. The 8th Pay Commission, which was announced by the Cabinet on January 16 earlier this year, may be implemented by 2026 or 2027. Prime Minister Narendra Modi had lauded the decision and said that it will help the central government staff to battle the scourge of high inflation. The Prime Minister had said that the 8th Pay Commission decision will not only help the employees to improve the quality of life but also aid in boosting the consumption. Hailing the staff, PM Modi had said that all government employees are the main driving force for building a ‘Viksit Bharat’. (Read More)

Inputs on the Terms of Reference (ToR) have been requested from key stakeholders, including the Ministry of Defence, Ministry of Home Affairs, Department of Personnel & Training, and various state governments. The impact of the 8th CPC can only be evaluated after its recommendations are submitted and approved by the Government.

8th Pay Commission: Central government employees will see a sharp spike in their salaries as and when the 8th Pay Commission is implemented by the government. According to a Goldman Sachs, the central government staff may see a hike of Rs 19,000 in their monthly salary after the 8th Pay Commission comes into force. Latest estimates show that the move will benefit close to 65 lakh pensioners and around 50 lakh central government employees. (Read More)

In the 7th Pay Commission, implemented in 2016, the fitment factor for salary hikes was increased by 2.57 times, raising the minimum basic salary from Rs 7,000 to Rs 18,000.

• With a Rs 1.75 lakh crore budget allocation, the salary may rise to Rs 1,14,600 per month.
• With a Rs 2 lakh crore budget allocation, the salary may increase to Rs 1,16,700 per month.
• With a Rs 2.25 lakh crore budget allocation, the salary may go up to Rs 1,18,800 per month.

The anticipated salary hike may also fluctuate based on budget allocations. According to the report, a mid-level government employee earning Rs 1 lakh per month before taxes could see the following salary increase.

The Pay Commission, a government-appointed body, periodically reviews and suggests revisions to salaries, pensions, and benefits for central government employees and pensioners, typically every 10 years, taking into account economic conditions, inflation, and the cost of living.

Finance Minister Nirmala Sitharaman stated that as of March 1, 2025, the estimated number of Central Government civilian employees stands at 36.57 lakh, while pensioners and family pensioners total 33.91 lakh as of December 31, 2024. Additionally, Defence Personnel and Pensioners will also benefit.

Although previous pay commissions have typically taken over a year to submit their reports, employee representatives anticipate that the 8th Pay Commission’s recommendations could be implemented starting January 1, 2026.

Moneycontrol had reported earlier this week that the Centre will be finalising the terms of reference by the end of this month or early next month. The Centre also maintains that the announcement will be done in 'due course.'

The Centre on Tuesday said that the Central Pay Commission will be set up soon. Minister of State (Finance) Pankaj Chaudhary told Parliament that the govt will constitute the CPC. However, he didn't divulge other details. Chaudhary was responding to query by Rajya Sabha lawmakers Madan Rathore, Shambhu Sharan Patel and Kiran Choudhry.

Good morning and welcome to our live coverage of 8th Pay Commission developments. While the Centre has repeatedly spoken about constituting the Central Pay Commission, there has been no fixed timeline for formally announce terms of the CPC among other things. Latest reports say that the 8th Pay Commission will be formally set up in beginning of April next month. Stay with us to know more salary hike, comparison with 7th Pay Commission data, concept of fitment factor and more.