7th Pay Commission: Good news for central government employees and pensioners! Any central government employee who now retires on 30th June or 31st December will be entitled to a notional increment, which will result in higher pension for them.
According to a Department of Personnel and Training (DoPT) order, employees retiring a day before the annual increment will receive a notional increment for the calculation of their pensionary benefits.
What is this new DoPT order?
The DoPT order says employees who retire on 30 June or 31 December – that is, they are just one day away from the increment to be received on 1 July or 1 January. The central government every year hikes dearness allowance (DA) for employees in January and July every year, through the announcements are made much later in March and October/November, respectively.
So now it has been clarified that those retiring a day before in June and December will not be at disadvantage just because they retire one day before the official annual increment.
As this increment will be considered valid for the calculation of pension and it will not have any effect on gratuity or other retirement benefits.
When did the increment system change?
Before 2006, every employee’s increment date was different. But from January 1, 2006, it was fixed and increment started being given on July 1 every year. In 2016, there was another change and now two dates — January 1 and July 1 — are considered for increment. But those who retire just a day before were deprived of this benefit.
What did the court say?
Many employees went to court regarding this issue. In 2017, the Madras High Court ruled in favor of the employee in a case and DoPT implemented it. After this, many such cases came to light across the country. The Supreme Court also made it clear in 2023 and then in 2024 that if an employee has served honestly throughout the year, then he is entitled to increment even on the last day.
Under what conditions will this benefit be available?
The DoPT has taken this decision after taking opinion from the Ministry of Finance and the Department of Law. According to the order: This benefit will be available only to those whose service has been complete and satisfactory till retirement. Notional increment will be used only for calculating pension.
“The matter has been examined in consultation with D/o Expenditure and D/o Legal Affairs. It is advised that… action may be taken to allow the increment on 1stJuly / 1st January to the Central Government employees who retired/are retiring a day before it became due i.e. on 30th June / 31st December and have rendered the requisite qualifying service as on the date of their superannuation with satisfactory work and good conduct for calculating the pension admissible to them,” the DoPT said.
“As specifically mentioned in the orders of the Hon’ble Supreme Court, grant of the notional increment on 1st January/ 1st July shall be reckoned only for the purpose of calculating the pension admissible and not for the purpose of calculation of other pensionary benefits,” it further said.
Also read: DA hike for July 2025: Central govt employees, pensioners to get a bigger raise in next revision?
Summing up…
This decision of the government will give great relief to thousands of retired employees. This is a step that gives relief not only financially but also mentally. If there is a member in your family who has retired on 30 June or 31 December, then this news is very important for them – now they will get their rights.