Explained: What the 8th Pay Commission Means for Central Government Employees

The Union Cabinet has approved the constitution of the 8th Pay Commission, setting the stage for the next round of salary and pension hikes for over one crore central government employees and retirees.

Even though the Cabinet has given the green light, the Commission is not yet constituted. It has been learnt that a chairman and two members are yet to be appointed. Furthermore, the Terms of Reference—which outline what the Commission must study—are yet to be issued. Only after this will the panel commence its work.

Going by the Commission’s track record, the entire process could take at least two years. For example, the 7th Pay Commission was formed in 2014 and its recommendations came into effect in 2016.

Therefore, central government employees are unlikely to get any hike before 2027. However, there is a possibility that any changes will be implemented with retrospective effect from January 1, 2026.

Though nothing is official yet, experts and employee unions are anticipating a significant jump in the basic pay. The key metric is the “fitment factor,” which is a formula used to calculate the revised basic salary of central government employees whenever a new pay commission is implemented. While it was 2.57 earlier, some media reports suggest that it could range from 1.92 to 2.86 in the 8th Pay Commission.

Just to give an example, if the minimum current basic pay of a government employee is Rs18,000 and it is revised with a 2.5 fitment factor, it could rise to Rs 45,000. At 2.86, it could touch Rs 51,480. Even if it is just 1.92, the basic pay would be Rs 34,560.

Retirees can also expect a revision in their basic pay. The minimum pension is currently Rs 9,000 and could go up to Rs 22,500 or more depending on the final fitment formula. This could be a boon for pensioners who are grappling with inflation and rising medical costs.

While salaries and pensions may not rise immediately, if the process gets expedited, employees could see higher pay—possibly with arrears—from next year onwards. All eyes are now on when the Commission will be formally set up and what recommendations it will make.