There is news of great relief for lakhs of central employees and pensioners who have been waiting for a long time. The government has given the green signal to the Terms of Reference (ToR) of the Eighth Central Pay Commission and has also finalized the names of the panel members. This news is a happy occasion for all those who were eagerly waiting for the increase in their salary and pension.

What will the Pay Commission do?

As always, the Eighth Pay Commission will not only review the salaries but will also prepare a new formula to calculate salary and pension in future. Based on the recommendations of this commission, the government will decide the fitment factor, which determines the basic pay of employees and pension of pensioners. In simple words, the fitment factor works like a multiplier. The bigger the factor, the higher the salary!

How much can the salary increase?

Suppose, the current basic salary of an employee is Rs 35,000. In the Seventh Pay Commission, a fitment factor of 2.57 was implemented, according to which the new salary became Rs 35,000 × 2.57 = Rs 89,950. Now if the fitment factor in the Eighth Pay Commission remains between 2.0 to 2.5, then the new salary can range from Rs 70,000 to Rs 87,500. This means that the salary can increase by more than Rs 30,000 in one stroke!

understand the mathematics of salary

Let us understand this in an easier way. If the current monthly salary of an employee is Rs 45,000, which includes basic salary, DA, HRA and other allowances. Suppose, the basic salary in this is Rs 18,000. In the Seventh Pay Commission it was multiplied by 2.57. If the fitment factor is fixed at 3.0 or 3.1 in the Eighth Commission, then the new basic pay may range from Rs 54,000 to Rs 56,000.

Now add 35-42% DA and other allowances to this, then the total salary can reach Rs 78,000 to Rs 85,000 per month. That means a normal government employee, who is currently earning Rs 45,000, may see an increase of Rs 30,000 to Rs 40,000 in his salary. This news will definitely bring a smile on the faces of lakhs of employees!

When will the new commission come into effect?

The current Seventh Pay Commission is in effect from 2016. Usually a new pay commission is implemented every 10 years. It is estimated that the Eighth Pay Commission may be implemented from 2028. However, the Finance Ministry has not yet officially confirmed this. Nevertheless, there is excitement about the news among employees and pensioners, and everyone is hopeful that more clear information will emerge soon.