The demand for pension improvements and measures to address rising inflation for central government employees and pensioners has been raised by several prominent unions in their official memoranda submitted to the 8th Pay Commission.

The 8th Pay Commission’s recommendations on salary and pension revisions are closely tracked by central government employees and pensioners, particularly those covered under the Old Pension Scheme (OPS).

Several employee and pensioners’ organizations have submitted proposals seeking higher pensions, improved family pension and parity between existing and future retirees.

How much could pensioners eventually receive if the 8th Pay Commission considers fitment factors of 2.5, 3, or 3.5? Here are calculations for existing basic pensions ranging from ₹25,000 to ₹75,000.

What is basis for existing basic pensions of ₹25,000 to ₹75,000?

As per the existing pension framework, eligible central government employees under OPS generally receive a basic pension calculated at 50% of their last-drawn emoluments or average emoluments of the last 10 months, whichever is higher, subject to the applicable rules.

For example, an employee retiring with a last-drawn basic salary of ₹50,000 could receive a basic pension of ₹25,000. Along similar lines, an employee retiring with a last-drawn basic pay of ₹1 lakh could receive ₹50,000 as basic pension. Note that this is only the basic pension and does not include additional benefits such as Dearness Relief (DR), medical and other allowances.

Accordingly, this calculation assumes existing basic pensions ranging from ₹25,000 to ₹75,000, in increments of ₹5,000. These are not fixed pension amounts that are prescribed for individual 7th Pay Levels. They represent different amounts that could broadly correspond to last-drawn basic pay of ₹50,000 to ₹1.5 lakh, assuming a 50% pension calculation.

What could pensions look like under 2.5, 3 and 3.5 fitment factors?

The 7th Pay Commission had recommended two different methods for revising pensions of employees who retired before 1 January 2016. In the first method, their pay was to be notionally decided and fixed in the 7th Pay Matrix, with pension calculated at 50% of the resulting notional pay.

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Whereas the second method involved multiplying the existing pension by 2.57. However, the government subsequently decided and approved the notional-pay-based method of calculation, with pensioners receiving the more beneficial calculation.

Utilizing the historical fitment-factor approach as a reference, the following table shows how the existing basic pension could change under three hypothetical fitment factors.

Existing basic pension (assumed)

At 2.5 fitment factor

At 3.0 fitment factor

At 3.5 fitment factor

₹25,000 ₹62,500 ₹75,000 ₹87,500 ₹30,000 ₹75,000 ₹90,000 ₹1,05,000 ₹35,000 ₹87,500 ₹1,05,000 ₹1,22,500 ₹40,000 ₹1,00,000 ₹1,20,000 ₹1,40,000 ₹45,000 ₹1,12,500 ₹1,35,000 ₹1,57,500 ₹50,000 ₹1,25,000 ₹1,50,000 ₹1,75,000 ₹55,000 ₹1,37,500 ₹1,65,000 ₹1,92,500 ₹60,000 ₹1,50,000 ₹1,80,000 ₹2,10,000 ₹65,000 ₹1,62,500 ₹1,95,000 ₹2,27,500 ₹70,000 ₹1,75,000 ₹2,10,000 ₹2,45,000 ₹75,000 ₹1,87,500 ₹2,25,000 ₹2,62,500

Note: The fitment factors and calculations above are illustrative. They are not approved government figures.

Therefore, for example, a pensioner currently receiving a basic pension of ₹40,000 could end up securing a revised pension of ₹1 lakh at a 2.5 fitment factor, ₹1.2 lakh at a 3 fitment factor, and ₹1.4 lakh at a 3.5 fitment factor.

What pension-related demands have employee and pensioners’ organizations made?

Several prominent employee unions and associations have submitted pension-related recommendations to the 8th Pay Commission. The National Council-Joint Consultative Machinery (NC-JCM) and the All India Defence Employees’ Federation (AIDEF) have sought, respectively, an increase in the full pension from 50% to 67% of last-drawn pay and in the family pension from 30% to 50% of last-drawn pay.

Similarly, the Bharat Pensioners Samaj (BPS) has demanded a minimum pension of ₹45,000, with 67% of last-drawn pay as pension. Other proposals include One Rank One Pension (OROP) for civilian employees, raised by organizations, such as the All India New Pension Scheme Employees Federation, as well as pension-related parity and retirement benefit reforms sought by railway employees’ representatives.

Will pensioners actually receive these amounts?

The fitment factors of 2.5, 3 and 3.5 used in the calculations above are hypothetical assumptions only. They are not officially announced 8th Pay Commission recommendations. This time the 8th Pay Commission panel might even adopt an entirely different pension and salary revision formula, as happened during the 7th Pay Commission, when the central government eventually approved the notional pay-based method for pre-2016 pensioners.

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The demands submitted by employee and pensioners’ organizations through their official memorandums are proposals only and do not automatically become government policy.

For pensioners, the outcome will depend on the 8th Pay Commission’s recommendations and the government’s subsequent approval. The 8th Pay Commission panel, headed by Justice Ranjana Prakash Desai, is expected to table its report by May-June 2027, in line with the commission’s Terms of Reference (ToR). Until the official figures are released, these calculations illustrate possible pension amounts rather than guarantee future retirement benefits.

Disclaimer: The pension calculations are illustrative estimates based on hypothetical fitment factors. Actual revisions will depend on the 8th Pay Commission’s recommendations and the government’s final approval.