Business: As discussions around the 8th Pay Commission begin to surface, government employees are keenly anticipating potential revisions to their salaries and pensions. The anticipated 8th Pay Commission may bring significant salary increases for government employees, with projections suggesting that Level 1 salaries could rise to Rs 34,560, while Level 18 could reach up to Rs 4.8 lakh. These revisions would also affect pensions under the Unified Pension Scheme (UPS), which would be calculated based on the updated pay scales. Though no official announcement has been made, here’s what could be expected if the commission is set up and its recommendations are implemented. 

Expected salary and pension revisions

The 8th Pay Commission is anticipated to propose a substantial increase in the basic pay and pension of government employees, in line with inflation rates and rising cost of living. Analysts predict that the basic pay could see a hike of 20-30%, similar to the increments recommended by the previous commissions. Additionally, the fitment factor, which determines the revised salary from the basic pay, could be increased from the current 2.57 times to potentially 3 times or higher.

Date of Implementation

While there is no confirmed timeline, experts suggest that the 8th Pay Commission could be constituted by 2025, with recommendations likely to be implemented by 2026. This timeline would align with the usual 10-year gap between pay commissions, considering the 7th Pay Commission’s recommendations were implemented in 2016. 

Key Features and Expectations

• Revised pay structure: The commission is expected to review the existing pay matrix and propose revisions that ensure fair compensation, keeping in mind the inflation and economic conditions.
• Pension revisions: Pensioners could see a corresponding increase in their pensions which is likely to maintain parity with the revised pay scales. This will provide relief to retired government employees to match with increased living costs.
• Dearness Allowance (DA): The DA, which is a crucial component of government salaries, may see enhanced calculation methods to more accurately reflect the changes in the consumer price index.
• Streamlined pay bands: Simplification of the pay bands and grades to reduce disparities and ensure a more uniform pay structure across various government departments.
• Performance-linked incentives: There might be a focus on linking a portion of the salary hikes to performance metrics, aiming to enhance productivity in government services.

8th Pay Commission: Revised salaries and pension

According to media reports, the 8th Pay Commission's pay matrix is expected to be prepared using a fitment factor of 1.92. With this factor, the current minimum salary for Level 1 employees, which stands at Rs 18,000 with grade pay of 1800 under the 7th Pay Commission, could be revised to Rs 34,560 under the 8th Pay Commission.

For Level 18, the highest pay scale in the central government fixed for the position of cabinet secretary, the current maximum salary is Rs 2.5 lakh. If the proposed fitment factor of 1.92 is applied, the maximum salary in the government sector could be revised to Rs 4.8 lakh. These revisions would represent a significant increase in pay across all levels, aligning with the anticipated adjustments under the new pay commission.

Similarly, the minimum pension might become Rs 17,280. Under the proposed revisions of the 8th Pay Commission, a person with a maximum salary of Rs 4.8 lakh, along with a Dearness Allowance (DA) of Rs 96,000, could receive a pension of Rs 2.88 lakh. This pension amount represents 50% of the last drawn salary, which is expected to apply to those in Level 18 positions, as per reports.

Other details

The 8th Pay Commission will also likely address other long-standing demands of government employees, including increased House Rent Allowance (HRA), transport allowance, and other perks that could align with current market conditions. According to reports, discussions on reducing the income tax burden on government salaries may also be a part of the deliberations. Government employees and pensioners are advised to stay updated as more concrete information regarding the commission’s formation and recommendations is expected to emerge in the coming months.