Introduction to the 8th Pay Commission
The 8th Pay Commission has been approved by the Centre, and its recommendations are expected to have a significant impact on the pensions of retired central government employees. The fitment factor, a key determinant of the pension hike, is yet to be decided by the Union Cabinet.
Factors Determining the Pension Hike
The pension hike will be determined by the fitment factor, which is a multiplier used to revise salaries and pensions under each pay commission. The fitment factor for the 8th Pay Commission will only be confirmed after the Union Cabinet approves the commission’s recommendations.
How Pensions Will Be Recalculated
The pensions will be recalculated based on the revised basic pay, which will be multiplied by the fitment factor. For example, if the revised basic pay is Rs 1,20,000 and the fitment factor is 3.0, the revised basic pension will be Rs 60,000.
Impact of the Pension Hike on Retired Employees
The pension hike will have a significant impact on retired central government employees, with many expecting an increase in their pension amounts. However, the higher pension also means higher tax liability, which could affect the take-home pension of retired employees.
Dearness Relief, Family Pension, and EPS
Dearness relief, family pension, and EPS will also see automatic gains due to the pension hike. For example, if the old pension is Rs 20,000 and the revised pension is Rs 30,000, the dearness relief will increase from Rs 4,000 to Rs 6,000.
Higher Pension Means Higher Tax Liability
The higher pension also means higher tax liability, which could affect the take-home pension of retired employees. For example, if the pension increases from Rs 20,000 to Rs 50,000, the tax payable will increase from Rs 600 to Rs 66,000.
Other Demands of Retired Employees
Retired employees are also seeking improvements in commutation periods and medical benefits, alongside other long-pending issues. The All India NPS Employees Federation is demanding a reduction in the commutation period from 15 years to 12 years and an increase in medical benefits from Rs 3,000 to Rs 20,000.
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