Around 49 lakh central government employees and nearly 65 lakh pensioners are eagerly waiting for a salary and pension hike under the proposed 8th Pay Commission. The commission has already been formed, raising hopes of a major revision in pay structures for government staff across the country. However, the biggest question still remains unanswered, how much salary increase will employees actually get? The final hike will largely depend on the fitment factor, which is a key formula used to revise basic pay and pensions. The government is yet to announce this crucial number.
According to experts higher fitment factor would lead to a bigger jump in salaries and pensions. Employees’ unions are demanding a fitment factor of at least 3.0 or more, as rising inflation and living costs continue to put pressure on household budgets. Once implemented, the 8th Pay Commission is expected to benefit millions of employees working in various central government departments, along with retired pensioners. Experts believe the revised pay structure could significantly boost disposable income and increase consumer spending in the economy. However, an official announcement regarding the fitment factor and implementation timeline is still awaited from the government.
The government announced the 8th Pay Commission in January 2025. The Union Cabinet approved its Terms of Reference on October 28, 2025, and the commission was formally notified on November 3, 2025. Justice Ranjana Prakash Desai is heading the panel, with Prof. Pulak Ghosh and Pankaj Jain as members. The commission has 18 months to submit its report, which is expected by mid-2027. It is currently consulting stakeholders, with submissions open till May 31, 2026.
The fitment factor will decide the extent of salary and pension hikes. In the 7th Pay Commission, it was fixed at 2.57, raising the minimum salary to Rs 18,000 and minimum pension to Rs 9,000. For the 8th Pay Commission, the figure is yet to be announced. Estimates range from 1.8 to 2.46, while employee unions are demanding between 2.86 and 3.25.
For those who retired before January 1, 2016, the government adopted two methods and paid whichever amount was higher. The first was the “notional pay” method, where pension was recalculated using the 7th Pay Commission pay matrix and annual increments. The second method multiplied the 6th Pay Commission pension by 2.57 using Concordance Tables. This created different pension groups among older retirees, leading to ongoing parity concerns.
Employees retiring after January 1, 2016 receive pension equal to 50 percent of their last drawn basic pay. Since they retired under the 7th Pay Commission pay matrix, the calculation process is simple.
