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The Indian government has confirmed the initiation of consultations for the 8th Central Pay Commission (CPC), which is expected to revise the salaries, allowances, and pensions of central government employees and pensioners, with a potential implementation date of January 1, 2026. While the government has acknowledged receiving suggestions from employee organizations, including the restoration of the Old Pension Scheme (OPS), a definitive decision on this matter or the 8th Pay Commission's terms of reference (ToR) has not yet been finalized.
Discussions are ongoing with various stakeholders, including ministries and state governments, to formulate the ToR and appoint the commission's chairperson and members. Employee unions have strongly advocated for the reinstatement of OPS, particularly for those who joined government service after January 1, 2004, arguing it provides a more secure and guaranteed retirement income compared to the market-linked National Pension System (NPS). However, the Union government has previously stated there is no proposal under consideration to revert to the Old Pension Scheme for employees recruited after January 1, 2004.
Recent reports suggest that the 8th Pay Commission might recommend an effective salary hike of around 13%, which is slightly lower than the 14.3% granted during the 7th Pay Commission. This projection is partly due to the anticipated reset of Dearness Allowance (DA) to zero upon the implementation of the new pay structure, with a proposed fitment factor of 1.8. The Union government has noted the demands for OPS restoration and other benefits like increased education allowance and cashless medical facilities as part of the recommendations received.
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