8th Central Pay Commissions

Dear Sir, 

1.      I thank you for sending the paper on likely 8th CPC pay scales. The Hon’ble Union Minister of Information & Broadcasting Mr Ashwin Vaishnaw informed in press conference in New Delhi on 16 Jan 2025 that the Union Cabinet presided over by Hon’ble Prime Minister approved constitution of 8th CPC. 

2. The paper you sent to me is a well written one which gives some idea as what to expect in the 8th CPC which will be effective from Jan 2026 from when new pay and pension tables will come into effect. 

3.      I too did some quick thinking on the likely Fitment Factor of 8th CPC since 17 Jan 2026 which to my mind will decide how much is going to be an increase in pay and allowances of serving employees of Central Govt, PSUs etc and pensioners of Central Govt.

4.      *Central Pay Commissions (CPCs)*. If you see any CPC report, it gives the history of all past CPC reports right from post war committee recommendations on pay scales to the last CPC report. Even 8th CPC broadly may give essence of what each CPC did till 7th CPC and bring out how the 8th CPC decided to either go with the recommendations of previous CPCs or change it altogether like 7th CPC did. If you see the reports of 5th CPC to 7th CPC, you find there is a major change in each of these pay commissions.

5.      *Terms of Reference*. The term of reference the Govt of India gives to any CPC is the ability of the Govt to pay the serving employees and pensioners over the next 10 years. The Economist member of the 8th CPC makes his own forecast how much Govt of India is likely to earn in next 10 years based on so many forecasts (including IMF and Government's own economists like the Chief Economic Advisor, Niti Ayog etc) and that has bearing on what should be the maximum Fitment Factor it can afford. This will decide what should be lowest pay and highest pay of serving Central Govt Employees from Jan 2026 to Dec 2035. As on date the minimum pay is Rs 18,000 of the lowest grade employee i.e. level 1. 

6. *Ability of the Govt of India to Pay to its Employees and Pensioners*. Like any home budget, the Govt of India knows how much it earns in the form of taxes, loans given etc and how much is must pay back. The committed expenditure is as under which Govt of India has to incur: -

(a) Pay & Allowances of 49 lakh serving Central Govt Employees 

(b) Pensions to 1.05 lakh pensioners.

© Interest payment on the loans it has taken from agencies like IMF, other countries etc.

(d) Purchase of new plant, machinery and weapons etc by various ministries.

(e) National Disasters.

(f) Unforeseen expenditure etc.

7. Therefore, any Govt of the day must see how much extra financial burden it can take to increase the pay & allowances and pensions from Jan 2026. That is the biggest determinant in Fitment factor. The 8th CPC may recommend any Fitment Factor, but Govt of India must critically examine whether it has the ability to pay to its employees and pensioners and may decrease or increase the Fitment Factor. The 6th CPC recommended Fitment Factor of 1.74 (Jan 2006 to Dec 2015) but Govt of the day agreed for 1.86. Higher the Fitment Factor, higher is your pension.

8. *What is the Existing Pay and Pension?* As we know the recommendations of the 8th CPC will come not in Jan 2026 even it is constituted tomorrow as it takes generally one and half year (18 months) for the CPC to consult various stake holders and then finalize their recommendations. Therefore, Govt of India has to pay DR from Jan to Jun 2025, Jul to Dec 2025 and Jan to Jun 2026. 

9. *What is the fitment factor?* It is nothing but the sum of pay and DR. Our pension will go up say 3% every six months till Jan – Jun 2026. In that case our pension will be as under: -

(a) Jan to Jun 2025 : 53% existing + 3% = 56%.

(b) Jul to Dec 2025: 56 + 3 = 59%.

© Jan to Jun 2026 = 59+3 = 62%.

Therefore the commitment of the Govt of India is to pay 1.62 times the pay or pension till Jan – Jun 2026. We can call it as existing Fitment factor in Jan 2026.

10. *DR*. The DR in next three half years from Jan 2025 to Jun 2026 will play a very important role in fixing the Fitment Factor. I took only 3% as likely increase in DR in next one year and half. It can be 4% or 5% or even 10%. But calculations become extremely complex. So let me confine myself to three patterns of DR as under: -

(a) Govt of India may declare DR increase of just 3% only. The existing fitment factor is 1.53 + 3+3+3 = 1.62 of matrix pay or basic pension.

(b) It can be 4% in all the three half years. In that case the existing fitment factor is 1.53 + 4 + 4 + 4 = 1.65.

© It can be 5% in all three half years. Then fitment factor existing is going to be 1.53 + 5+ 5+ 5 = 1.68.

11. There are many options for the Govt of India even if the 8th CPC may recommend any Fitment Factor due to resource constraints. But the new fitment factor in 8th CPC has to be higher than 1.62 to 1.68. If it is 1.68 then there will be no increase in pay & allowance to serving employees or pensions to the pensioners. This generally does not happen.

12. *What is the Likely Fitment Factor the Govt of India may Concede?* Already the Railway Federation of Employees have demanded Fitment Factor of 2.86. That means the minimum matrix pay of the lowest grade employee in level 1 from Jan 2026 will be = Rs 18,000 of existing minimum pay of 7th CPC x 2.86 = Rs 51,480 + DR. Will the Govt of India be able to pay such huge pay to its Level I employees who are the largest in number?  

13. *Old Age Pension*. The newspaper reports suggest the old age pension will be from 65 year at 5% (with the same increase for every 5 years with increase in age of 5 years). Then those who are in 70 to 74 age group will get 10% old age pension and those in age group of 75 to 79 will get an old age pension of 15% with upper limit of 20% to 80-year-old pensioners unchanged. 

14. *Income Tax*. The minimum income tax the Hon’ble Finance Minister will give in her budget of Feb 2025 will also be one of the deciding factors. If your pension goes up, you will be paying higher income tax every month and your take home pension will be after TDS.

15.      *Fitment Factor*. The fitment factor is the most important data which will tell us how much is going to be our pay and pensions from Jan 2026. It is a multiplication factor by which the pay and pension goes up from Jan 2026. If one goes by 7th CPC, our pension in Jan 2016 = Pension in Dec 2015 x 2.57 (Fitment Factor). Dr Aykroyd method of finding out how much a family of four need to survive decided the fitment factor of 2.57 in 7th CPC which the paper you sent me gives in detail. 

16.      There must be some increase in pay and pension to cater for additional funds needed to fulfil responsibilities and demand for money till Dec 2035 which is the period of 8th CPC (Jan 2026 to Dec 2025).

17.      What we must understand is the following important data as in Jan 2026: -

(a)  Fitment factor which increases pay and pension as in Jan 2026 compared to Dec 2025.

(b)  No DR in the period Jan to Jun 2026 and very small increase ranging from 2 to 3% in the period Jul to Dec 2026.

©    Higher income tax due to higher pay and pension.

(d)  The DR in the period Jan 2025 to Jan 2026 is going to be higher. 

(e)   The Fitment factor also increases all allowances and for Defence Service Personnel such as HRA, CCA, Uniform Allowance etc and for pensioner MSP will also get increased. 

(f)   I feel Govt of India even it is generous is likely to  increase the minimum pay of Central Govt Employee at the most by 50% of what he is drawing with DR of 62% by Jan 2026, then the fitment factor = 18000 x 1.62 = 29,160. If you see the increase of pay and pensoin in all previous CPCs it is not more than 50%. But I cannot say it will be restricted to only 50%. It can go up beyond 50% too which is a purely political decision and demands from stake holders.

 

18. *Effect of Increase in Fitment Factor*.

Min Pay in  Jan 2026 with DR of 62% Rs 29,160 = Rs 18000 x 1.62 with DR at 3% in all three half years till Jun 2026

*Fitment Factor* *Likely Minimum  Pay in Jan 2026 for Level I Employees*

1.50                        Rs 43,740

1.75                        Rs 51,030

1.85                        Rs 53,946

2.00                        Rs 58,320

2.20                        Rs 64,152

2.40                        Rs 69,984

2.60.                Rs 75,816

2.70                        Rs 78,732

2.80                       Rs 81,648

2.86                       Rs 83,398 As demanded by Railways Employees Federation

18.  *Time Plan*. This is per past practice of earlier CPCs.

 

(a)  The Govt of India took a decision to constitute 8th CPC on 16 Jan 2026. 

(b ) The selection and gazette notification of the Chairman and two members will take 1 to 6 months i.e. February  to July 2025. 

(c)   The Min of Finance, the nodal ministry to formulate terms of reference to 8th CPC will take three months i.e. Jul to Oct 2025. The Terms of Reference are very important document which will tell the 8th CPC how to go about the revision of pay & allowances to serving employees and pensions to the retired employees.

(d)  Consultation and finalization of 8th CPC report as per past practice is minimum 1 year to 1 year 6 months i.e. Jan to Mar 2027.

(e)   The Group of Secretaries may take 6 to 9 months to submit what Govt of India should accept or modify or reject the recommendations of 8th CPC. Jul to Sep 2027.

(f)   The Group of Ministers take again three to six months to finalize the Govt’s decision i.e. Oct to Dec 2027.

(g) Issue of approval of Union Cabinet and dissemination is any time after Dec 2027.

 (h)  All ministries will take 6 to 9 months to implement the new pay scales and pensions of 8th CPC i.e. Jan to Nov 2028 in time before model code of conduct for general elections 2029 are issued by Election Commission of India.

*Note*: This is as per past practice. It may be shortened also. Then it is good for us.

 

*My Own Forecast (See the Attachment)*

19. When one does not have data, one has to assume some data of DR and likely increase in pay & allowances and Pension the Govt of India my give i.e. from low of 20% to high of 100% (unlikely). If you see the past increases, it is not more than 50% in 7th CPC. 

20. Effect of Income Tax.  This depends upon how the IT slabs are decided in budget of Feb 2025, Feb 2026 and even in Feb 2027 if finally, the Govt of India accepts the recommendations of 8th CPC. Since all pensioners in the income tax bracket (officers and wives of deceased officers will come under IT) must pay Income Tax (TDS), the net increase will further come down. Then you have to see how much the actual increase in the Take Home Pension your Bank is will give you after TDS. 

21. I assumed DR in three levels at 3% in all three half years, 4% in all three half years and 5% in all three half years ending in Jun 2026. I also assumed if the Govt of India is willing to increase the emoluments or pension by minimum of 20% to 50%, then what is going to be fitment factor and what is going to be Take Home Pension after TDS. 

22. The calculations become extremely complex if you work out various permutations and combinations for which you need a good software which I do not have.

23. What I forecast may be totally incorrect or may be correct to some extent. What you find in YouTube many experts are predicting the Fitment Factor, and my own guess work is not very far off. 

24. If you still have any doubts, I will be too happy to clarify.

warm regards,

Brig CS Vidyasagar (Retd)

President, T SEWA

75695 13350