The Union Cabinet has approved the 8th Pay Commission, which is expected to come into effect from January 1. With that date now clearly in view, central government employees and pensioners are closely tracking what the next round of pay revision could mean for salaries, pensions and allowances.
The commission is expected to revise pay structures for serving employees as well as pension benefits for retirees. Allowances, including Dearness Allowance, are also likely to be recalibrated to reflect inflation trends over the past decade.
Estimates suggest that the pay revision could impact nearly one crore people. This includes close to 50 lakh serving central government employees, including defence personnel, and around 65 lakh pensioners, also including defence retirees.
Pay Commissions are typically constituted once every ten years to review salaries, pensions and allowances, taking into account economic conditions and changes in the cost of living.
Amid the discussions, speculation had emerged on social media about the future of Dearness Allowance for pensioners. On December 13, 2025, the government clarified that claims suggesting pensioners would stop receiving DA hikes under the Finance Act 2025 were false.
The government stated that post-retirement benefits such as DA hikes and Pay Commission-linked revisions will continue as usual. These benefits would only be withdrawn in cases where an employee is dismissed for misconduct.
Officials cited Rule 37 of the CCS (Pension) Rules, 2021, which was amended to state that if an absorbed PSU employee is dismissed for misconduct, retirement benefits can be forfeited.
One of the key elements under discussion is the fitment factor, which is used to revise salaries and pensions across pay levels. The 8th Pay Commission is expected to review factors such as inflation trends, real wage erosion, fiscal capacity and the government’s overall compensation framework.
Early projections suggest that the fitment factor could be around 2.57. This is the same multiplier used by the previous Pay Commission, though that does not automatically translate into a straight-line increase in salaries by the same multiple.
For now, much of the conversation around the 8th Pay Commission is based on estimates and projections. Clearer details are expected only once the commission finalises its recommendations and the government takes a formal decision.
Until then, employees and pensioners are likely to watch inflation data, fiscal signals and official communication closely as January 1 approaches.
