The government approved the formation of the 8th Pay Commission in January 2025, but it is yet to be officially formed. Almost 35 lakh central government employees and more than 67 lakh pensioners are anticipating the release of the Terms of Reference (ToR) for the 8th Pay Commission soon.
The calculation of salaries, allowances and pension based on fitment factor is a major concern for the central government employees and retired personnel. The fitment factor can significantly affect the total amount for employees and pensioners.
Fitment Factor And Salary Revisions
Fitment factor is a number that plays a crucial role in determining an employee's basic salary. The 7th Pay Commission set it at 2.57, thus increasing minimum pay to Rs 18,000 from Rs 7,000.
As per media reports, the 8th Pay Commission could recommend a fitment factor in the range of 2.5 and 2.86. A fitment factor of 2.86 will increase the minimum basic salary to over Rs 51,000 from Rs 18,000 currently.
Accordingly, basic pay and allowances for employees at different levels will be revised. For example, if the basic pay is Rs 35,400 and the fitment factor is 2.57, the basic pay will rise to Rs 90,978.
The fitment factor is basically a multiplier used to adjust the pay scales.
Merger Of Dearness Allowance With Basic Pay
According to a report in the Economic Times, the 8th Pay Commission could recommend a merger of Dearness Allowance (DA) with the basic salary. Before the expected implementation date of Jan. 1, 2026, one DA hike is pending announcement, which will be effective from July 2025.
The report notes that while it will increase the overall salary package, future DA hikes will start from zero.
House Rent Allowance and Travel Allowance
Location and travel due to work will be important considerations in revising the House Rent Allowance (HRA) and Travel Allowance (TA). It implies that employees at the same level of pay could have varying gross earnings due to differences in allowances they get.
Potential Revised Benefits For Pensioners
Previous Pay Commissions have changed the formulas for calculating pensions and benefits. The ET report added that similar changes could be recommended by the 8th Pay Commission as well.
To conclude, the implementation of the recommendations of the 8th Pay Commission is most likely to be delayed. The government has yet to announce the members and chairperson of the commission. Until the ToR is finalised, it is difficult to ascertain what the 8th Pay Commission's recommendations will entail.
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