As the government has introduced the Unified Pension Scheme, calculation of salary, DA, Pension will also change under 8th Pay Commission if it will be implemented in 2026.
Central government employees were not happy with the New Pension System (NPS), after a long pending demand, the government combined features of both the NPS and the Old Pension Scheme (OPS) & launched Unified Pension Scheme. The 8th Pay Commission, is expected to launch in 2026, which may increase salaries, wherein Level 1 may potentially rise to Rs 34,560 and Level 18 to Rs 4.8 lakh.
Similarly pensions under the Unified Pension Scheme (UPS) can also be calculated based on these revised salaries. In the NPS, employees are required to contribute 10% of their basic pay each month, which is matched by a 14% contribution from the government.
Unified Pension Scheme Features
The UPS includes provisions for a fixed pension amount–a guaranteed and predetermined sum that a retiree will receive regularly after retirement.
Under the UPS, all central government employees who have served for 25 years or more will receive 50 per cent of their last drawn salary from the past 12 months as a pension. Additionally, these employees will be eligible for post-retirement inflation-linked increments to their pension amount. The minimum pension has been set at Rs 10,000 for those who have served at least 10 years.
8th Pay Commission: Salary Calculation
According to the media reports, the 8th Pay Commission’s pay matrix is likely to be prepared using a fitment factor of 1.92. With this fitment factor, the current minimum salary for Level 1 under as per 7th Pay Commission, is Rs 18,000 with a grade pay of 1800, under 8th Pay comission can be revised to Rs 34,560.
The maximum salary for Level 18, the highest pay scale in the central government fixed for the position of cabinet secretary, is currently Rs 2.5 lakh. Under the 8th Pay Commission, if the fitment factor is 1.92, the maximum salary in the government sector may be revised to Rs 4.8 lakh.
8th Pay Commission: Pension Calculation Under UPS
Under the UPS, the pension will be set at 50% of the average monthly salary of the 12 months preceding superannuation.
First batch of employees recruited in 2004 will retire in 2029. If the 8th Pay Commission is actually implemented in January 2026, the minimum salary is projected to be Rs 34,560, while the maximum could reach Rs 4.8 lakh. Employees may also receive five DA hikes on their salaries by January 2029. Assuming a 4% increase in each revision, the DA total increase will be by 20% of the basic salary by 2029.
So for a salary of Rs 34,560, a 20% DA would add Rs 6,912, the person with this salary amount may get a pension of Rs 20,736, as it is calculated as 50% of the basic salary plus DA, for those in Level 1.
For A person with a maximum salary of Rs 4.8 lakh, with a DA of Rs 96,000, The pension for those in Level 18 can be Rs 2,88,000, which is 50% of their last drawn salary in January 2029, according to the Financial Express report.