Union cabinet approves terms for 8th pay commission
The Union Cabinet has officially approved the Terms of Reference (ToR) for the 8th Central Pay Commission. The commission is a temporary body composed of one Chairperson, one part-time Member, and one Member-Secretary, with a timeline to submit its recommendations within 18 months of constitution. The 8th Pay Commission is expected to make recommendations on pay structures, allowances, pensions, and other service conditions of central government employees and pensioners, with the changes likely to be implemented from January 1, 2026.
Justice Ranjana Prakash Desai, a former Supreme Court judge, has been appointed as the Chairperson. The commission will consider economic conditions, fiscal prudence, developmental needs, pension costs, and the impact on state finances while making its recommendations. It will benefit approximately 50 lakh central government employees and 69 lakh pensioners.
Key details include:
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Commission formation announced in January 2025
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Recommendations due within 18 months
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Expected implementation date: January 1, 2026
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Members include Justice Ranjana Desai (Chairperson), Prof. Pulak Ghosh (part-time member), and Pankaj Jain (Member Secretary)
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Focus on salary revisions, allowances, pensions, and working conditions compared with public and private sector employees
This approval sets in motion the process for the next major salary revision for central government employees and pensioners.
How will recommendations affect central employee salaries from 2026
The recommendations of the 8th Central Pay Commission, expected to be implemented from January 1, 2026, will significantly affect central government employee salaries by revising pay structures, allowances, and pensions. The commission aims to ensure fairness, parity, and fiscal prudence while recommending salary hikes and improved service conditions for about 50 lakh employees and 69 lakh pensioners.
Key impacts on salaries include:
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A potential salary increase of up to ₹19,000 per month for mid-level employees, depending on the budget allocation and fitment factor applied.
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The fitment factor, which multiplies existing salaries to determine new pay, is likely to range between 1.83 and 2.86. For reference, the 7th Pay Commission used a 2.57 fitment factor, resulting in a 157% hike.
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The minimum basic salary could rise from ₹18,000 to anywhere between ₹34,560 and ₹46,260 per month, depending on the final fitment factor.
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Pensions will also see a corresponding increase, potentially doubling minimum pension amounts.
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The 8th CPC is expected to merge Dearness Allowance (DA) and Dearness Relief (DR) with the basic pay, simplifying salary and pension structures and reflecting inflation adjustments directly in base pay.
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The commission will consider economic conditions, fiscal discipline, developmental needs, unfunded pension liabilities, and impacts on state finances while finalizing recommendations.
Central employees can anticipate a meaningful increase in their take-home salaries and pensions from 2026, along with streamlined pay structures that better adjust for inflation and economic realities.
