8th Pay Commission: Big Changes Ahead for Employees and Pensioners, Salary Hike Details Explained

New Delhi: The Central Government has constituted the 8th Pay Commission after the expiry of the 7th Pay Commission. The Commission is entrusted with the task of reviewing the salaries, allowances, and pensions of employees and pensioners and giving recommendations. The government has given the Commission 18 months to submit its report, so now almost every government employee and retired person is eager to know when the new recommendations will be implemented.

What is the fitment factor, and what are its expectations this time?

The fitment factor is the multiplier by which basic salary and pension are calculated—it is directly considered to be the biggest determinant of salary increase. According to experts and reports, this time the fitment factor is being estimated in the range of 2.4 to 3.0; some analysts are predicting a probability between 2.5 and 3. This means that a huge surge in minimum basic is possible, provided the government and the Commission move in this direction. 

What effect can this have on salary and pension?

Assuming the fitment factor falls between 2.5 and 3, the projected increase in basic salary and pension will be clearly visible. Based on previous calculations and modeling, the minimum basic may increase a few times, while pensions are also expected to improve considerably. Such an increase will also bring obvious relief in installments of allowances and pension benefits, but the exact picture will be visible only when the official recommendations of the Commission come out. 

Will Dearness Allowance (DA/DR) and other allowances be affected?

A big question is whether DA/DR will be merged into the new salary or not. It is also being raised in some discussions that if the Commission submits the report late, the arrears of many allowances will not be cleared and the employees may suffer financial loss. Experts have warned that a clear policy on the issues of allowances, HRA, and pension arrears will be necessary.

What steps is the government working on now, and what is the timeline?

It has been made clear through government responses and parliamentary discussions that the financial arrangements and budget footprint to implement the 8th Pay Commission recommendations will be assessed. While the Commission's recommendations are timely, the process of implementing them will require administrative and financial decisions—so employees will have to be patient until the final announcement. 

What advice is being given to employees right now?

Experts recommend that employees exercise some caution in their budgeting and financial decisions now; it would be wise to postpone big spending and long-term borrowing plans until the Commission's recommendations and government announcements are clear. Also, pensioners should also keep an eye on government updates related to DA and pension cut-over.