The Union Cabinet on Thursday approved the 8th Pay Commission, bringing significant relief to over 1.2 crore central government employees and pensioners who are keenly awaiting a thorough revision in their salaries and pensions.

Ahead of the Union Budget 2025, this announcement of the 8th Pay Commission hints that there might be similar other employee welfare measures the Modi government could be rolling out in the coming months.

After the Cabinet approval for the new pay commission, Prime Minister Modi emphasised the transformative impact of the decision, while Union Minister Ashwini Vaishnaw assured that the commission’s recommendations will be implemented seamlessly before the 7th Pay Commission’s term ends in 2026. “Massive consultations” will be done with various stakeholders including states on the agenda, to ensure recommendations are finalised with a comprehensive and inclusive approach.

Also read: 8th Pay Commission announced! What will be revised salaries, pensions for central govt employees?

Here are the key announcements made by the government regarding the 8th Pay Commission:

Cabinet approval for the 8th Pay Commission

The Union Cabinet approved the setting up of the 8th Pay Commission to revise the salaries of nearly 50 lakh central government employees and the pensions of about 65 lakh retirees.

Appointment of Pay Commission members

The chairman and two members of the 8th Pay Commission will be appointed soon and they will begin consultations with central and state governments and other stakeholders.

Timely implementation of 8th Pay Commission

The government is confident that the recommendations of the 8th Pay Commission will be received well before the term of the 7th Pay Commission ends in 2026.

Historical significance of pay commissions

Since India’s independence in 1947, seven pay commissions have been constituted. These pay panels have from time to time played a pivotal role in deciding salary structures, benefits, and allowances for central government employees. The 7th Pay Commission was formed in 2014 and its recommendations were implemented in January 2016.

Will give boost to quality of life and consumption, says PM Modi

Prime Minister Modi emphasised that there will be a positive impact of the 8th Pay Commission decision and it will improve the quality of life for government employees and retirees while boosting consumption in the economy.

What will be the increase in minimum salary and pension for govt employees?

Experts estimate a fitment factor ranging from 1.92 to 2.86, which could result in pensions increasing from the current Rs 9,000 to anywhere between Rs 17,280 and Rs 25,200. Besides a hike in basic pensions for employees, allowances and perks will also see a massive revision.

If a fitment factor of 2.86 is implemented, pensions and salaries could see an increase of approximately 186%, representing a substantial uplift. The fitment factor is crucial in determining the revised pension.

The fitment factor is a key multiplier used to calculate salaries and pensions for government employees.

Based on trends from previous pay commissions, pensions under the 8th Pay Commission could witness an average increase of 20-30%. However, the exact percentage will depend on factors like economic conditions and budgetary constraints.

Future enhancements may include higher allowances for senior pensioners and increased dearness relief (DR) to address inflation and ensure adequate post-retirement support.