8th Pay Commission: Expected salary, pension hike; change in fitment factor and more 

The 8th Pay Commission is scheduled to be implemented from January 1, 2026. The pay commission was approved on January 16, 2025 and is set to benefit over 50 lakh central government employees and approximately 65 lakh pensioners by revising salaries, pensions, and allowances.

The commission will evaluate adjustments to salaries and pensions, focusing on crucial topics such as the fitment factor and minimum wage standards.

Millions of employees and pensioners are awaiting the implementation of the 8th Pay Commission, hoping for substantial revisions that align with today’s economic realities.

On January 16, 2025, Prime Minister Narendra Modi and the Union Cabinet have granted approval for the creation of the 8th Pay Commission. 

It’s important to note that the government has not yet published the Terms of Reference for the 8th Pay Commission. Although Budget 2025 put forth various proposals for taxpayers, the budget documents did not address the costs the Central government will face in implementing the 8th Pay Commission.

Key proposal 

A significant proposal from the Staff Side advocates for the consolidation of lower pay scales to ensure equitable compensation and promote opportunities for career growth. The suggestion involves merging specific levels: Level 1 with Level 2, Level 3 with Level 4, and Level 5 with Level 6.

The goal of this merger is to address the existing pay progression disparities and create a more transparent salary structure. By combining these levels, it is expected that employees will experience greater growth, as it will minimize stagnation and enhance financial improvement over time.

At present, a Level 1 employee earns Rs 18,000 monthly in basic pay, while a Level 2 employee receives Rs 19,900. Following the merger, the Level 1 employee could see greater benefits, as the new pay structure will begin at this level. Additionally, with the expected pay increase from the 8th pay commission, which may introduce a fitment factor of up to 2.86, the estimated revised basic pay is projected to rise to Rs 51,480.

Fitment factor

A crucial aspect of the pay commission is the fitment factor, which serves as a standard multiplier for recalibrating salaries and pensions at all levels. This mechanism guarantees consistent pay increases, no matter the employee's grade or pay band. 

With the introduction of the 7th Pay Commission, the minimum basic salary experienced a substantial increase, going from Rs 7,000 to Rs. 18,000, thanks to a fitment factor of 2.57. Similarly, pensions were also significantly revised, climbing from Rs. 3,500 to Rs. 9,000. Additionally, the commission rolled out a new health insurance scheme for central government employees.

Although the official fitment factor for the 8th Pay Commission has yet to be revealed, projections indicate it might hover around 2.5. This could result in considerable increases in salaries and pensions—potentially raising a salary of Rs. 40,000 to as high as Rs. 1,00,000, depending on the applied multiplier and grade pay.