By how much will the basic pension of central government employees increase upon the implementation of the 8th Pay Commission? Learn the full calculation based on various fitment factors.

8th Pay Commission: Anticipation regarding the 8th Pay Commission is growing among central government employees and pensioners. If you or a family member has retired from a central government job, this news is highly relevant to you. A significant hike in the basic pension of central government pensioners could be witnessed once the 8th Pay Commission is implemented.

Let us understand in simple terms how this pension hike will occur and how much money you will receive based on different fitment factors.

What is the current rule for determining pension?

Under current pension rules, when a central government employee retires, they receive 50% of their last basic pay or average pay as their basic pension. Basic pay increases due to annual increments during service, which in turn determines the pension amount received after retirement.

Under the 7th Pay Commission, the annual increment rate is currently 3%. However, employee organizations (Staff-Side NC-JCM) have demanded a minimum salary of ₹69,000, an increase in the annual increment to 6%, and a fitment factor of 3.833 in the new pay commission.

How will the fitment factor change your pension?

If the rule granting 50% of pay as pension is retained, your revised basic pension will be determined using this formula:

Revised Basic Pension = (Basic Pension under 7th CPC) × Fitment Factor

Understand the pension hike based on various hypothetical fitment factors (2.24, 2.57, and 3.833) through this table:

How much will Level 7 employees benefit?

For instance, if an employee retired from Level 7 with an initial basic pay of ₹44,900, their base pension under the 7th Pay Commission amounts to ₹22,450. Under the 8th Pay Commission, their revised pension based on various fitment factors could be as follows:

At a 2.24x fitment factor: ₹22,450 × 2.24 = ₹50,288
At a 2.57x fitment factor: ₹22,450 × 2.57 = ₹57,696.50
At a 3.833x fitment factor: ₹22,450 × 3.833 = ₹86,050.85

What will the final decision depend on?

Please note that the figures provided above are based on estimated calculations. The final pension amount under the 8th Pay Commission will depend on the recommendations made by the Pay Commission and the specific fitment factor and pension formula ultimately approved by the government.