8th Pay Commission update: The Union Cabinet led by Prime Minister Narendra Modi on Tuesday approved the Terms of Reference (ToR) for the 8th Pay Commission which will benefit over 50 lakh Central government employees and more than 69 lakh pensioners. The 8th Central Pay Commission (8th CPC) will recommend necessary changes in the salaries allowances bonuses and pensions for central employees and retirees. Which allowances will likely be affected? The 8th Pay Commission headed by former Supreme Court judge Justice Ranjana Prakash Desi will review allowances granted to employees and pensioners and examine their utility and terms and conditions and will if necessary eliminate unnecessary allowances. The Commission will review Death-cum-retirement gratuity for employees under the National Pension System (NPS) and will also make recommendations on pension and gratuity rules for retirees who are not covered under the NPS and draw their pensions based on the old pension scheme. While there is no official information yet it is expected that the 8th Pay Commission is likely to recommend sweeping changes or completely abolish travel allowance special duty allowance minor regional allowances and old departmental allowances (such as typing/clerical allowance) with an aim to simplify the salary structure. Will pensioners get a major hike? Akin to salaries of in-service central government employees the hike will be determined by Fitment factor which will be confirmed after the 8th Pay Commission recommendations are approved by the Union Cabinet. The key to finding out the salary and pension hike is the fitment factor which was 2.57 in the 7th Pay Commission and based on estimates could be in the range of 1.86 to 2.57 for the 8th CPC. According to experts if the 8th Pay Commission recommendations in line with previous CPCs a significant hike is expected in salaries and pensions and many estimated that retirees could be the biggest beneficiaries as monthly pension could be doubled based on the current fitment factor estimates. When will 8th Pay Commission be implemented? If we go by the implementation of previous pay commissions the government usually takes about 18 to 24 months to implement the recommendations of the commission. Thus its unlikely that 8th Pay Commission would be implemented before mid-2027 while reports suggest that the next CPC implementation might be pushed back to early 2028. As per a report by Kotak Institutional Equities 8th Pay Commission might be implemented in 2026 or early 2027. Earlier this week the Prime Minister Narendra-led Union Cabinet approved the terms of reference (ToR) of the 8th Pay Commission which will benefit 50 lakh central government employees and 69 lakh pensioners and will have implications on the emoluments of the staff of state governments. The ToR of the commission was approved by the Cabinet about nine months after it gave an in-principle nod to setting up the 8th Pay Commission and the ToR has been finalised after consultation with various ministries state governments and staff side of joint consultative machinery according to an official statement.