The Union Cabinet, led by Prime Minister Narendra Modi, has given its formal approval to the constitution of the 8th Pay Commission. The new pay structure, a highly anticipated move for millions, is set to take effect from 1 January 2026. This decision sets the stage for potential revisions in salaries, pensions, and various allowances for serving as well as retired personnel of the central government.
What Pensioners Can Expect from the 8th Pay Commission
While central government staff await detailed guidelines, a significant focus is on how the commission will impact pensioners. There is no officially announced percentage for the pension hike yet. According to Anirban Ghatak, Assistant Professor of Economics at the Indian Institute of Management, Kozhikode, the eventual increase will hinge on two key elements: the fitment factor and the new pay matrix the commission recommends.
The fitment factor is a crucial multiplier used to re-fix the basic pay and, consequently, the basic pension. Monika Rajpoot, Assistant Professor of Economics at Delhi University's Motilal Nehru College, provided an illustrative scenario. She stated that if the fitment factor is set between 2.3 and 2.8, the minimum pension amount could rise to approximately ₹20,000, a substantial jump from the ₹9,000 under the 7th Pay Commission. This would translate to an increase ranging from 100% to 190%.
"Pensioners are expecting to be granted an identical uniform fitment factor as an active member, thereby promoting equity across all categories," Rajpoot added. The benefits are also expected to extend to family pensioners. The application of the fitment factor to the basic pay means the absolute value of the family pension, typically 30% of basic, will see a commensurate rise.
How the Fitment Factor Directly Impacts Your Pension
Experts have outlined possible scenarios to demonstrate the fitment factor's effect on the basic pension:
- If the fitment factor is set at 1.92, the basic pension becomes roughly 1.92 times its current value, implying an increase of about 92%.
- A fitment factor of 2.15 would make the basic pension about 2.15 times higher, a jump of approximately 115%.
- Should the factor be set at 2.57, mirroring the one used in the 7th Pay Commission, the basic pension would become around 2.57 times its current value, indicating a rise of about 157%.
It is vital to note that this multiplication applies to the basic pension. Professor Ghatak pointed out a key procedural detail: upon implementation of a new pay commission, the accumulated Dearness Relief (DR) is reset to zero. It then starts building again on the revised, higher pension base. "Hence, the immediate in-hand change can look different from a simple multiplication headline," he noted.
The Crucial Question: What Will the Fitment Factor Be?
The core task for the 8th Pay Commission is to strike a balance between compensating for inflationary pressures and maintaining the health of government finances—a principle consistent since the last revision in 2015.
While discussions and early estimates suggest a range of possibilities—from 1.83 to 2.57—nothing has been finalized. Professor Ghatak clarified that although figures like 1.92, 2.15, or 2.57 are being discussed, these remain speculative at this stage. There is ongoing speculation that the government might opt for a factor as high as 2.57.
The implementation of the 8th Pay Commission is poised to benefit nearly one crore central government employees and retirees. However, it is important to remember that using the same fitment factor as the previous commission (2.57) does not automatically guarantee an identical percentage increase in take-home salary, as the calculation involves multiple components within the new pay matrix.
The approval marks the beginning of a detailed process, with millions across the country keenly awaiting the final recommendations that will shape their financial outlook for the coming years.
