8th Pay Commission: proposal for pension at 67% of last salary
Employee and pensioner bodies want minimum pension set at 67 percent of last drawn salary, with higher rates for older pensioners
The 8th Pay Commission has become a major talking point for central government employees and pensioners. Formed under the tradition of setting up a central pay commission every 10 years, the commission is currently holding consultations at various levels. Meetings are being held across the country to hear the demands of employee organisations, pensioner organisations and other stakeholders.
The commission is headed by retired Supreme Court judge Ranjana Prakash Desai as chairperson. Former IAS officer Pankaj Jain is serving as member secretary, while Pulak Ghosh, a professor of economics associated with the Prime Minister's Economic Advisory Council, is a member of the commission. The commission's work is being taken forward under the leadership of these three.
The commission was formed on November 3, 2025. As per rules, it has to submit its recommendations within 18 months of formation, meaning the deadline for the final report is May 2027. Some important information or announcement is expected between February and April 2027. Since the commission's final recommendations are yet to come, no firm figure can be given for how much pensions will increase.
The commission's recommendations will affect around 50 lakh central government employees and nearly 65 lakh pensioners, including employees and retirees of the defence and railway departments.
Several employee and pensioner organisations have demanded a major change in the pension structure. NC-JCM, the Maharashtra Old Pension Organisation and AIDEF are among the organisations that have placed their demands and proposals before the commission. Two major options are under discussion for raising the minimum pension. The first proposal demands that the minimum pension be at least 67 percent of the last salary drawn, that is, the Last Pay Drawn. The second proposal demands that the minimum pension be fixed on the basis of the average salary of the last 10 months before retirement.
A proposal to raise pension by age for elderly pensioners is also under discussion. Under this proposed structure, it has been demanded that pensioners get 70 percent of their last salary at age 65, 75 percent after 70, 80 percent after 75, 85 percent after 80 and 90 percent after 85. For pensioners aged 90 or above, there is a proposal to give pension of up to 100 percent of the last salary. However, this is only a proposal and has not yet been approved by the central government.
Concerns have been raised that the commission's Terms of Reference do not clearly address pension reform for employees who retired before January 1, 2026, so organisations are demanding that this group also get the benefit of the pension reforms.
The commission is currently in the process of consultation and reviewing demands, so pensioners are watching proposals such as the minimum pension, age-based pension increases and a fixed percentage of the last salary. Notably, no final decision has been taken on any of these proposals yet. Once the commission's recommendations come in, approval from the central government will be required, so the actual increase pensioners will get and which rules will apply will only become clear after the final report.
