8th Pay Commission Pension Calculations: Best- and worst-case fitment factor scenario, revised pension projections for central govt employees in Level 1-18 pay matrix

The commission formation is in process, but the government has not announced the name of the chairman and its members. Replying to a question in Lok Sabha, Finance Minister Nirmala Sitharaman said last month that the commission's details, including the terms of reference and the timeline for the report’s submission, would be decided later.

 

In the 7th Pay Commission, they were decided on the basis of the fitment factor, which was taken at 2.57.  It means the basic pay and pensions applied to pensioners in the 6th Pay Commission were multiplied by 2.57.

If a central government employee retired at last-draw basic pay of Rs 79,000, as on May 31, 2015, under the 6th Pay Commission in the scale of Rs 67,000-Rs 79,000. Here's what their pension was in the 6th Pay Commission and the 7th Pay Commission.

Basic pension in 6th Pay Commission- Rs 39,500 Basic pension in 7th Pay Commission- Rs 1,01,515 (using a multiple of 2.57)

Take another example: if someone retired at last-drawn basic salary of Rs 4,000 as on January 31, 1989, under the 4th Pay Commission in the pay scale of Rs 3,000-100-3,500-125-4,500, here's what their basic pension was revised-

 

Basic pension in 4th Pay Commission- Rs 1,940 Basic pension in 6th Pay Commission- Rs 12,600 Basic pension in 7th Pay Commission- Rs 32,382

 

The minimum pension was raised to Rs 9,000, while the maximum was raised to Rs 1,25,000.

It may depend on the dearness allowance (DA) reading as on January 1, 2026, and the expected salary that the Pay Commission recommends. However, the Cabinet can also come up with its suggestion even after the Pay Commission has suggested a fitment factor. 

 

Based on the assumption of the minimum DA hike of 2 per cent each in the next 2 phases, it may reach from its current rate of 55 per cent to 59 per cent on January 1, 2026. Analysing recommended salary rises from the 2nd to the 6th Pay Commissions, the worst was 14.20 per cent in the 2nd, and the best was 54 per cent in the 6th. The average hike from the 2nd to the 6th was 27 per cent. The recommendation for the 7th Pay Commission was 14.27 per cent. Historically, the worst-case scenario for the expected salary hike is 14.20 per cent.

Now suppose the DA hike for the next 2 cycles is 3 per cent each; it will reach 61 per cent by January 1, 2026. Similarly, if we look at historical salary rise recommendations, the highest has been for 54 per cent for the 6th Pay Commission. 

For this calculation, we are taking the DA of 59 per cent and the expected salary rise recommendation of 14.20 per cent. According to that, the estimated fitment factor will be 1.82.

For this calculation, we are taking a 61 per cent DA rate and the expected salary rise recommendation of 54 per cent. According to that, the estimated fitment factor will be 2.48.

Based on estimated fitment factors of 1.82 and 2.48, we will calculate the estimated revised pensions for central government employees in 1-18 pay matrix brackets.

Grade Current basic pension Projected basic pension Level 1 ₹ 9,000.00 ₹ 16,380.00 Level 2 ₹ 9,950.00 ₹ 18,109.00 Level 3 ₹ 10,850.00 ₹ 19,747.00 Level 4 ₹ 12,750.00 ₹ 23,205.00 Level 5 ₹ 14,600.00 ₹ 26,572.00 Level 6 ₹ 17,700.00 ₹ 32,214.00 Level 7 ₹ 22,450.00 ₹ 40,859.00 Level 8 ₹ 23,800.00 ₹ 43,316.00 Level 9 ₹ 26,550.00 ₹ 48,321.00 Level 10 ₹ 28,050.00 ₹ 51,051.00 Level 11 ₹ 33,850.00 ₹ 61,607.00 Level 12 ₹ 39,400.00 ₹ 71,708.00 Level 13 ₹ 59,250.00 ₹ 1,07,835.00 Level 13 ₹ 65,550.00 ₹ 1,19,301.00 Level 14 ₹ 72,100.00 ₹ 1,31,222.00 Level 15 ₹ 91,100.00 ₹ 1,65,802.00 Level 16 ₹ 1,02,700.00 ₹ 1,86,914.00 Level 17 ₹ 1,12,500.00 ₹ 2,04,750.00 Level 18 ₹ 1,25,000.00 ₹ 2,27,500.00

Grade Current basic pension Projected basic pension Level 1 ₹ 9,000.00 ₹ 22,320.00 Level 2 ₹ 9,950.00 ₹ 24,676.00 Level 3 ₹ 10,850.00 ₹ 26,908.00 Level 4 ₹ 12,750.00 ₹ 31,620.00 Level 5 ₹ 14,600.00 ₹ 36,208.00 Level 6 ₹ 17,700.00 ₹ 43,896.00 Level 7 ₹ 22,450.00 ₹ 55,676.00 Level 8 ₹ 23,800.00 ₹ 59,024.00 Level 9 ₹ 26,550.00 ₹ 65,844.00 Level 10 ₹ 28,050.00 ₹ 69,564.00 Level 11 ₹ 33,850.00 ₹ 83,948.00 Level 12 ₹ 39,400.00 ₹ 97,712.00 Level 13 ₹ 59,250.00 ₹ 1,46,940.00 Level 13 ₹ 65,550.00 ₹ 1,62,564.00 Level 14 ₹ 72,100.00 ₹ 1,78,808.00 Level 15 ₹ 91,100.00 ₹ 2,25,928.00 Level 16 ₹ 1,02,700.00 ₹ 2,54,696.00 Level 17 ₹ 1,12,500.00 ₹ 2,79,000.00 Level 18 ₹ 1,25,000.00 ₹ 3,10,000.00