In a significant development for lakhs of retired central government employees, the upcoming 8th Central Pay Commission (CPC) is expected to consider the reduction of the pension commutation period from 15 years to 12 years. This long-standing demand is now proposed to be included in the Terms of Reference (ToR) for the 8th CPC.

This potential change was discussed during the 34th meeting of the Standing Committee of Voluntary Agencies (SCOVA), held on March 11, 2025, where key pension-related issues were reviewed. The proposal, if approved, would benefit central government pensioners by restoring the commuted portion of the pension three years earlier than the current 15-year timeline.

🔍 What Is Pension Commutation?

Pension commutation allows pensioners to receive a lump sum amount by surrendering a part of their monthly pension. Currently, the commuted amount is recovered over a period of 15 years, after which the full monthly pension is restored. With the proposed 12-year recovery period, pensioners could begin receiving their full pension three years sooner, improving their financial stability during retirement.

🏛️ Highlights from the SCOVA 34th Meeting

• Date: March 11, 2025
• Platform: SCOVA – the official forum addressing pensioners’ grievances
• Agenda: Inclusion of pension commutation restoration (from 15 to 12 years) in the 8th CPC’s ToR
• Outcome: The Department of Pensions and Pensioners’ Welfare has agreed to forward this proposal for inclusion

📌 Expected Benefits for Pensioners

• Early restoration of full pension
• Improved financial security for senior citizens
• Alignment with past pensioners’ representations
• A positive precedent for future pension reforms

📣 Conclusion

This move by the 8th CPC, if finalized, would be a major relief for pensioners who have long advocated for earlier restoration of their full pension. With healthcare and living expenses on the rise, the 12-year commutation restoration would offer greater financial comfort and respect the needs of India’s retired workforce.

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Increase in Fixed Medical Allowance: Inclusion in the 8th Pay Commission Terms of Reference

The 34th meeting of the Standing Committee of Voluntary Agencies (SCOVA) took place on March 11, 2025, under the chairmanship of the Hon’ble Minister of State for Personnel, Public Grievances, and Pensions (MOS(PP)) at Vigyan Bhawan, New Delhi. Among the significant issues discussed was the increase in the Fixed Medical Allowance (FMA), which is crucial for pensioners facing rising healthcare costs.

Background on Fixed Medical Allowance

Fixed Medical Allowance is an essential component of the financial support provided to pensioners, aimed at helping them cover medical expenses. As healthcare costs continue to escalate, the adequacy of this allowance has come under scrutiny. Currently, the FMA is set at a rate that many stakeholders believe is insufficient to meet the rising demands of medical care.

Key Points from the SCOVA Meeting

During the meeting, it was highlighted that the current FMA is inadequate. The Department of Pension & Pensioners’ Welfare (DoP&PW) referenced recommendations from the Parliamentary Standing Committee, which advocated for an increase in the FMA to address the financial burden faced by pensioners.

Decision on FMA Increase:

• The committee decided to increase the Fixed Medical Allowance to Rs. 3000 per month. This increase reflects an understanding of the financial pressures exerted by escalating medical expenses on retired personnel.
• The Department of Expenditure indicated that this enhancement would be integrated into the Terms of Reference (TOR) of the 8th Pay Commission, ensuring that it gains formal recognition and consideration in future pay structures.

Implications of the Increase

The decision to increase the FMA has several implications:

1. Financial Relief for Pensioners: The hike to Rs. 3000 per month will provide much-needed financial relief to pensioners, enabling them to manage their medical expenses more effectively.
2. Recognition of Healthcare Costs: This decision acknowledges the rising cost of healthcare and the need for pension allowances to keep pace with inflation and increased medical service rates.
3. Future Considerations in the 8th Pay Commission: By including this issue in the TOR for the 8th Pay Commission, there is a commitment to evaluate and potentially adjust pension and medical allowances in a systematic manner, ensuring that pensioners are not left behind as costs continue to rise.

The inclusion of the increase in Fixed Medical Allowance in the Terms of Reference for the 8th Pay Commission marks a significant step towards addressing the financial challenges faced by pensioners in India. With the new allowance set to take effect from January 1, 2026, it reflects a proactive approach by the government to safeguard the welfare of its retired personnel amidst growing healthcare demands. The decision is expected to positively impact the lives of many retirees, ensuring they receive the necessary support for their medical needs.

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Shiva Gopal Mishra
Secretary

Ph.: 23382286
National Council (Staff Side)
Joint Consultative Machinery
13-C, Ferozshah Road, New Delhi – 110001
E-Mail : nc.jcm.np[at]gmail.com

No.NC/JCM/2025

Dated: January 10, 2025

Hon’ble Minister for Finance,
Ministry of Finance
(Government of India)
North Block,
New Delhi.

Respected Madam,

The staff Side of the National Council (JCM), representing the Central Government employees’ in the country submits the undernoted significant issues/demands of the Central Government for your for kind consideration and including same in the Union Budget 2025-2026.

1. Constitution of the 8th Central Pay Commission for Central Government Employees and Pensioners.

The Wage/Pension revision of the Central Government Employees/Pensioners including Armed Forces and Para Military Forces takes place once in 10 years and the next wage / Pension revision is due on 01.01.2026. As you are aware that any Pay Commission will take minimum 2 years for conducting its study /interaction etc. to submit its final report to the Government and the Government also will take minimum 6 months for taking decision on its implementation. Government itself says that the inflation is in the range of 4% to 7% and on an average it shall be about 9.9%. If we compare the retail prices of essential commodities and goods which are required for daily life from 2016 to 2023 they have increased by over more than 90% as per the local retail market. But we are provided only with 53% DA as on 01.07.2024. The Central Government Revenue has also doubled from the year 2015 to 2023 for which the Central Government Employees contribution is enormous. Moreover, due to acute shortage of manpower in all the Central Government Establishments each employee is forced to do the work of more than 2 employees. Due to the escalating price rise and increasing medical and housing expenditure etc. the Pensioners are also in deep trouble. It is also a fact that a major portion of the wages of the employees/Pension goes back to the Government in the name of Income Tax and GST etc. Therefore, the Hon’ble Finance Minister may kindly announce the setting up of 8th Central Pay Commission for the Central Government Employees and the Pensioners.

2. Releasing of 18 months arrears of Dearness Allowance/Release which was frozen during the COVID-19 Pandemic period.

We have been demanding to the Government that in accordance with the judgments of the Hon’ble Supreme Court and also considering the fact that the economic conditions of the country is in a satisfactory level, the 18 months DA / DR arrears due to the Central Government Employees and Pensioners which was frozen during the COVID-19 pandemic period may please be paid back to the employees and Pensioners.

3. Restoration of Festival Advance for the Central Government Employees.

In one of the meetings of the National Council (JCM) the Official Side agreed to restore Festival Advance to the Central Government Employees. Even after more than 2 years no Government orders have been issued in this regard. Since, the Festival Advance is only an interest free loan to be recovered in 10 installments, it is requested that as demanded by the Staff Side in the National Council (JCM) Rs.30,000/- per year may be sanctioned as Festival Advance.

4. Implementation of the recommendations of the Parliamentary Standing Committee on Petitions with regard to CGHS facilities to the Central Government Employees and Pensioners.

The Parliamentary Standing Committee on Petitions with regard to CGHS facilities to the Central Government Employees and Pensioners in its 162nd report on the petition “praying for comprehensive medical facilities to Central Government Employees, Pensioners and their dependents” to the Rajya Sabha on 10th of August, 2023 have given various recommendations for improvement of the CGHS functioning. Such as to ensure that once a referral is issued, patient should not be required to visit CGHS Doctor again for undergoing the prescribed treatment procedure / investigations, to settle the complaints on the empanelled hospitals charging excess amount from the beneficiaries, revision of the CGHS rates, establishing additional Wellness Centers, to address the issue of shortage of Doctors, to improve the attitude of Doctors and allied Staff towards the patients, to ensure availability of all types of Medicines, to improve the infrastructure of the Wellness Centers, to construct Buildings for housing the Wellness Centers, relaxation of norms with regard to setting up of new Wellness Centers and consider exploring setting up of new Wellness Centers at a rapid place in newer Towns, retired employees as well as their dependents can avail the benefits of CGHS without much hassle, setting up of more AYUSH WCs in newer cities and also undertake initiatives to popularize Indian system of medicines among the beneficiaries of CGHS etc. The Committee also recommended that a pan-India Committee comprising doctors, beneficiaries and Members of Parliament should be constituted at the top level to do brainstorming on practical things and be mandated to submit a report on the overall aspects of the CGHS following a review of the whole situation. We request to kindly implement all these recommendations of the Parliamentary Standing Committee.

5. Implementation of the Parliamentary Standing Committee recommendations on Pensioners grievances.

The Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice submitted its report on “Pensioners Grievances” on 10th of December, 2021. The Parliamentary Standing Committee in its report has recommended to implement the recommendations of the 7th CPC regarding Insurance amount and monthly contributions towards the Central Government Employees Group Insurance Scheme, the Committee recommended to provide additional Pension of 5% on attaining 65 years of age, 10% on reaching 70 years of age, 15% on reaching /5 years, enhancing Fixed Medical Allowance to Pensioners to Rs. 3,000/- per month, opening CGHS Centers at District locations or designating functional Government Hospitals in District Headquarters as CGHS Centers etc. None of these recommendations are implemented by the Government. We request that the Government of India may kindly implement all the above recommendation of the Parliamentary Standing Committee.

6. Restoration of Commuted Pension after 12 years.

The Staff Side of the National Council (JCM) has been demanding for restoration of the Commuted Pension after 12 years instead of the present 15 years, since the Government recovers the entire commuted Pension within 11 years with interest. Many of the State Governments are restoring the commuted portion of the Pension after 12 years. There is no justification for recovering the 40% commuted Pension from the Pensioners for 15 years. Therefore, it is requested that the Government may kindly restore the commuted Pension after 12 years from the date of commutation.

7. Strengthening and effective function of the Joint Consultative Machinery (JCM) Scheme for the Central Government Employees.

The JCM Scheme was introduced by the Government of India during the year 1964 with the object of promoting harmonious relations and of securing the greatest measure of cooperation between the Government in its capacity as employer, and the general body of the employees in matters of common concern, and with the object further, of increasing the efficiency of the public service. It is now 60 years after the scheme is introduced. While for the first 4 decades the scheme was functioning effectively with regular meetings and sorting out the problems through joint consultations and compulsory arbitrations, it is most unfortunate that during the past 2 decades the JCM Scheme is diluted and side lined in such a manner that meetings takes place very rarely, issues are pending years together without any solution resulting in arbitrary decisions by the Official Side in all the Ministries on Cadre Review/Corporatization/ Restructuring/Closure/Framing of RR/Abolition of posts etc. This has resulted in demoralization of the Central Government Employees which will have serious impact on their performance and productivity. We therefore, request the Hon’ble Finance Minister to kindly take a decision and announce in the Budget about the effective functioning of the JCM Scheme and to conduct meetings and take decisions in accordance with the constitution of the JCM Scheme.

8. Income Tax rebate for the salaried employees.

Considering the inflation and also the escalating cost of living, health care, education etc. there should not be any Income Tax on salaried income upto Rs. 10 lakh in a year. Tax deduction should be there only for the income which is over and above Rs.10 Lakh per year which means upto Rs.10 lakh income it should be tax free.

We sincerely hope that that your goodself will consider favourably the above-mentioned issues/ demands of the Central Government and proposals and the same will be included in the Union Budget 2025-26.

With Kind Regards,

Sd/-
(Shiva Gopal Mishra)
Secretary(Staff Side

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GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF EXPENDITURE
LOK SABHA
UNSTARRED QUESTION NO. 3541
TO BE ANSWERED ON MONDAY, AUGUST 08, 2022
SRAVANA 17, 1944 (SAKA)

“Constitution of 8th Pay Commission”

3541: SHRI DEEPAK BAIJ:
SHRI JANARDAN SINGH SIGRIWAL:
Will the Minister of Finance be pleased to state:

(a) whether the Government proposes to ensure timely constitution of 8th Central Pay Commission for Central Government employees so that it could be implemented on 01.01.2026;

(b) if so, the details thereof;

(c) if not, the reasons therefore; and

(d) the other measures being taken by the Government to increase their Salary in view of rising inflation?

ANSWER

MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)

(a): No such proposal is under consideration with the Government for constitution of 8th Central Pay Commission for the Central Government employees.

(b) & (c): Do not arise.

(d): In order to compensate Central Government employees for erosion in the real value of their salaries on account of inflation, Dearness Allowances (DA) is paid to them and the rate of DA is revised periodically every 6 months on the basis of rate of inflation as per All India Consumer Price Index for Industrial Workers (AICPI-IW) released by Labour Bureau under M/o Labour & Employment.

भारत सरकार
वित्त मंत्रालय
व्यय विभाग
लोक सभा
लिखित प्रश्न संख्या – 3541
सोमवार; 08 अगस्त, 2022707 श्रावण, 71944 (शक)

आठवें वेतन आयोग का गठन

3541. श्री दीपक बैज:
श्री जनार्दन सिंह सीग्रीवाल:
क्या वित्त मंत्री यह बताने की कृपा करेंगे कि:

(क) कया सरकार का केन्द्र सरकार के कर्मचारियों के लिए आठवें केंद्रीय वेतन आयोग का समय पर गठन सुनिश्चित करने का प्रस्ताव है ताकि इसे दिनांक 01.01.2026 को लागू किया जा सके;

(ख) यदि हां, तो तत्संबंधी ब्यौरा क्‍या है;

(ग) यदि नहीं, तो इसके क्‍या कारण है; और

(घ) क्या सरकार द्वारा बढ़ती महंगाई को देखते हुए उनके वेतन में वृद्धि के लिए अन्य उपाय किए जा रहे हैं?

उत्तर
वित्त मंत्रालय में राज्य मंत्री (श्री पंकज चाँधरी)

(क) सरकार के पास केन्द्र सरकार के कर्मचारियों के लिए आठवें केन्द्रीय वेतन आयोग के गठन के लिए कोई प्रस्ताव विचाराधीन नहीं है।

(ख) और (ग) प्रश्न नहीं उठते।

(घ) केन्द्र सरकार के कर्मचारियों को मुद्रास्फीति के कारण उनके वेतन के वास्तविक मूल्य में हास की क्षतिपूर्ति करने के लिए उन्हें महंगाई भत्ते का भुगतान किया जाता है और महंगाई भत्ते की दर में श्रम एवं रोजगार मंत्रालय के अधीन श्रम ब्यूरो दवारा जारी औदयोगिक श्रमिकों के लिए अखिल भारतीय उपभोक्ता मूल्य सूचकांक (एआईसीपीआई-आईडब्ल्यू) के अनुसार मुद्रास्फीति की दर के आधार पर आवधिक रूप से प्रत्येक 6 माह में संशोधन किया जाता है।

Lok Sabha

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Charter of Demands (Important Points) including

• Scrap NPS, Scrap the draconian FR 56(j) and Rule 48,
• Withdraw DA and DR freezing orders,
• Appoint 8th Central Pay Commission and revise the Pay, Allowances and Pensionary benefits,
• Increase 7th CPC minimum pay and fitment formula,
• Withdraw “Very Good” bench mark for MACP,
• Stop ban on creation of new posts,
• Stop Corporatisation and privatisation of Railways,
• Defence and Postal Departments,
• Grant equal pay for equal work for all,
• Merger of DA

REVISED CHARTER OF DEMANDS

(Submitted for approval of the National Executive Committee meeting to be held on 26-09-2020)

1. Scrap New Contributory Pension Scheme (NPS). Restore old defined benefit Pension Scheme (OPS) to all employees. Guarantee 50% of the last pay drawn as minimum pension.

2. (a) Scrap the draconian FR 56(j) and Rule 48 of CCS (Pension) Rules 1972. Stop terrorizing and victimizing employees.

(b) Withdraw the attack against the recognised status of Associations and Federations.

(c) Withdraw the anti-worker Wage/Labour codes and other anti-labour reforms.

(d) Stop attack on trade union rights.

3. (a) Withdraw the orders freezing the DA and DR of employees and Pensioners and impounding of arrears till 30.0-.2021.

(b) Implement five year wage revision and Pension revision to Central Government employees and Pensioners. Appoint 8th Central Pay Commission and revise the Pay, Allowances and Pensionary benefits of Central Government employees and Pensioners with effect from 01-01-2021.

(c) Honour the assurance given by Group of Ministers (GoM) to NJCA leaders on 30-06-2016. Increase minimum pay and fitment formula recommended by 7th CPC. Grant HRA arrears from 01-01-2016.

(d) Withdraw “Very Good” bench mark for MACP, grant promotional heirachy and date of effect of MACP from 01-01-2006.

Also check: MACP ON PROMOTIONAL HIERARCHY – MACP Supreme Court Order – Heard & Reserved 

(e) Grant Option-1 parity recommended by 7th CPC to all Central Govt. Pensioners. Grant one national increment to those who retired on 30th june.

(f) settle all anomalies arising out of 7th CPC implementation.

4. Stop ban on creation of new posts. Fill up all seven lakhs vacant posts in Central Government departments in time bound manner. Scrap National Recruitment Agency and introduce Department wise recruitment and Regional recruitment for Group B and C posts. Stop re-engaging retire personnel in Central Govt. services.

5. Stop Corporatisation and privatisation of Railways, Defence and Postal Departments. Withdraw closure/ merger orders of Govt. of India Printing Presses and Postal Stores depots/ Postal Stamp depots. Stop proposed move to close down salt department. Stop outsourcing and closure of Govt. establishments.

Also check: Merger of Dearness Allowance with the Basic Pay w.e.f. April 1, 2004

6. (a) Regularisation of Gramin Dak Sevaks and grant of Civil Servants status. Implement remaining positive recommendations of Kamalesh Chandra Committee Report.

(b) Regularise all casual and contract workers including those joined service on or after 01-09-1993.

7. Settle all Covid-9 related issues pertaining to Central Govt. employees and Pensioners on top priority basis. Treat the period of absence during lock down as duty. Grant full wages to casual, part-time, contingent contract workers during the lockdown period.

8. Grant equal pay for equal work for all. Remove disparity in pay scales between Central Secretariat staff and similarly placed staff working in field units of various departments.

9. Implement 7th CPC wage revision and pension revision to remaining Autonomous body employees and pensioners. Ensure payment of full arrears without further delay. Grant Bonus to Autonomous body employees pending from 2016-17 onwards.

10. Remove arbitrary 5% ceiling imposed on compassionate appointments. Grant appointment in all eligible cases.

11. Grant five time-bound promotions to Group B & C employees. Complete cadre review in all departments in a time bound manner.

12. Ensure prompt functioning of various negotiating forums under the JCM Scheme at all levels.

Source: confederation

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New Pay Commission may not be formed in future for increasing salaries of central government employees

The central government is mulling not to form any Pay Commission for increasing salaries and allowances of central government employees and and pensioners in future.

No new commission may be formed in future for increasing salaries of central government employees, a reliable source from Finance Ministry on condition of anonymity.

“The government is going to take a policy decision in this regard,” the source told our reporters.

Presenting an idea about the alternative arrangement, he said that the 7th Pay Commission recommended that the pay matrix may be reviewed periodically without waiting for the long period of ten years. It can be reviewed and revised on the basis of the Aykroyd formula which takes into consideration the changes prices of the commodities that constitute a common man’s basket, which the Labour Bureau at Shimla reviews periodically.

The Pay Commission also suggested that this should be made the basis for revision of that pay matrix periodically without waiting for another Pay Commission.

So, it will not be necessary to form a new pay Commission after every 10 years for central government employees and pensioners and whether any change is required regarding pay and allowances would be made considering inflation.

Food and Agriculture Organisation (FAO)’s first director and Nutritionist Wallace Rudel Aykroyd has formulated his recommendations on the basis of requirements of foods and clothes for a person. He took into consideration the factor related to price changes in commodities affecting the living of common man.

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“Whether the Government is considering an alternative for increasing the salaries and allowances of Central Government employees and pensioners in future instead of forming Pay Commission?”

Pay Commission Reports – Q&A in Lok Sabha

Whether the reports of successive Pay Commissions have been increasing the burden on Government finances/ exchequer in partially accepting their recommendations for increase in wages and if so, the details thereof; ?

The financial impact of the recommendations of the Central Pay Commission, as accepted by the Government, is normally more pronounced in the initial year and gradually it tapers off as the growth in the economy picks up and fiscal space is widened. While implementing the recommendations of the last Central Pay Commission, i.e., the Seventh Central Pay Commission, the Government staggered its implementation in two financial years. While the recommendations on pay and pension were implemented with effect from 01.01.2016, the recommendations in respect of allowances have been implemented with effect from 01.07.2017 after an examination by a Committee. This has moderated the financial impact of the recommendations. Moreover, unlike the previous 6th Pay Commission, which entailed substantial impact on account of arrears, the impact in the year 2016-17 on account of element of arrears of revised pay and pension on the present occasion of the 7th Central Pay Commission pertained to only 2 months of the previous financial year of 2015-16.

Whether the last Pay Commission has suggested productivity linked pay hike to the deserving employees to eliminate below average or mediocre performance and if so, the details thereof; ?

The Seventh Central Pay Commission in Para 5.1.46 of its Report proposed withholding of annual increment in the case of those employees who are not able to meet the benchmark either for Modified Assured Career Progression (MACP) or regular promotion within the first 20 years of their service.

Whether such periodic hikes in wages resulting from Pay Commission recommendations trigger similar demands from the State Government/public utility employees, imposing burden on already strained State finances and if so, the details thereof; and?

The service conditions of employees of State Governments fall within the exclusive domain of the respective State Governments who are federally independent of the Central Government. Therefore, the concerned State Governments have to independently take a view in the matter.

Whether the Government is considering an alternative for increasing the salaries and allowances of Central Government employees and pensioners in future instead of forming Pay Commission and if so, the details thereof?

No such proposal is under consideration of the Government.

Source: Lok Sabha

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Government is planning to abolish the system of formation of Pay Commission in future?

 Central Government replied that there is no such proposal at present under consideration.

 In Lok Sabha on 5th January 2018, A Hon‘ble member asked some questions about the Pay Commission and DA Merger as follows…

• whether the National Anomaly Committee (NAC) under the 7th Central Pay Commission has submitted its interim report, if so, the details thereof;
• whether the Government is planning to abolish the system of formation of Pay Commission in future, if so, the details thereof and the reasons therefor;
• whether the Government is considering to adjust the salaries of its employees and pensioners Dearness Allowance (DA) that crosses the 50 per cent mark, if so, the details thereof and if not, the reasons therefor; and
• whether the Department of Expenditure planning to take the responsibility to regularly monitor salaries and allowances of central government employees and recommend the changes if needed, if so, the details thereof and the reasons therefor?

The Minister of State for Finance Shri P.Radhakrishnan replied that the National Anomaly Committee set up by the Department of Personnel & Training in August, 2016 following the decision of the Government on the recommendations of the 7th Central Pay Commission has not yet met.

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