8th Pay Commission News: Central government employees and retirees are expecting a big relief on the pension commutation front under the 8th Pay Commission, which is expected to come out with its recommendations possibly next year. The long-standing demand to reduce the period of commuted pension restoration from 15 to 12 years is part of the charter of demands presented to the Centre from the Staff Side of the National Council (JCM), which is a major representative organization for central government employees.
It is expected that this issue will become a part of the Terms of Reference (ToR) of the 8th Central Pay Commission and millions of pensioners will get its benefit.
What is commuted pension?
When government employees retire, they get the option to take a part of their pension as a lump sum. This is called commutation of pension. In return, their monthly pension is deducted so that the government can recover that lump sum amount.
At present the rule is that this recovery is done in 15 years. That is, the monthly pension of that employee continues to be cut for the next 15 years and then the full pension is restored after 15 years.
Pensioners’ objection: Why is restoration necessary in 12 years?
Government employee unions and pensioners say that the 15-year restoration period is too long and it is also financially unfair. As interest rates have decreased, the inequality in the calculation of recovery by the government has increased. Due to this, retired employees lose a large part of their own pension.
If this period is increased to 12 years, then employees will be able to get their full pension back quickly, which will strengthen their financial position – especially at a time when medical expenses and cost of living are constantly increasing.
Major demands of NC JCM and employee unions
The National Council (JCM) – Staff Side has recently submitted a charter of demands to the Cabinet Secretary. It covers several key issues, including reducing the period for restoration of commuted pension from 15 to 12 years as a major demand.
This demand is now moving towards inclusion in the ToR of the 8th Pay Commission by the government, which has further strengthened the hope that this change may actually be implemented in the coming times.
Discussion in SCOVA meeting
This issue was also raised loudly in the 34th meeting of SCOVA (Standing Committee on Voluntary Agencies) held on 11 March 2025. The meeting was chaired by the Minister of State (Personnel, Public Grievances and Pensions).
In this meeting, the officials of the Department of Expenditure of the Ministry of Finance also admitted that the existing system needs to be made more equitable and practical. Only after this it was decided that this issue would become a part of the ToR of the 8th Pay Commission.
What is the status of the 8th Pay Commission?
It is worth noting that the term of the 7th Pay Commission is ending on 31 December 2025. Generally, the new pay commission is implemented at an interval of 10 years, so the 8th Pay Commission was considered to be applicable from 1 January 2026.
But till now the names of the members of the 8th Pay Commission have not been announced by the government nor its Terms of Reference (ToR) has been finalized. Due to this, it is being speculated that there may be a delay in its process and it may not be implemented on time.
Nevertheless, the issue of commuted pension has now become a priority, and a positive step is expected from the government in this direction.
What will be the benefit?
If the government accepts this demand and the 12-year period is implemented, then:
Employees who are retiring will start getting their full pension sooner
It will help in becoming financially independent
It will be easier to meet post-retirement expenses like health, social obligations, children’s responsibilities
Existing and old pensioners can also get relief (if the rule is implemented retroactively)
Conclusion: The old demand of employees can now become a reality
The government considering to extend the period of restoration of commuted pension to 12 years is a positive sign for lakhs of pensioners. While the process of 8th Pay Commission has not yet formally started, employees and pensioners are now hopeful of getting relief on this issue. This will not only be an economic reform but also a symbol of respect for those who have served the country for years.