Know what will be central employees’ salary, pension, DA calculation under Unified Pension Scheme and 8th Pay Commission
The Union Cabinet on February 24 approved the Unified Pension Scheme (UPS) for the betterment of the central government employees and pensioners. The UPS, which is a combined feature of both the New Pension System (NPS) and the Old Pension Scheme (OPS), will provide an assured minimum pension and family pension.
Under the UPS, which is slated to come into effect from April 1, 2025, if a government employee retires after serving for 25 years, 50 per cent of his basic salary for the last 12 months will be given as a pension. The special thing about this scheme is that it has provisions for an assured pension. If a government employee works for 10 years, at least Rs 10,000 pension will be paid by the government with indexation benefits.
In UPS, there is also a provision for family pension. If the employee dies after retirement, his family members will receive 60 per cent of his pension. A lump sum amount (apart from gratuity) will also be given on retirement in UPS. It will be calculated as one-tenth of the basic salary and dearness allowance (DA) for every six months of service.
Likewise, the Central Government is expected to launch the 8th Pay Commission in 2026. Once the UPS and 8th Pay Commission are implemented the salary and pensions of the central government employees would increase for sure.
According to a report of the Financial Express, the Level 1 salary may rise to Rs 34,560 while the Level 18 to Rs 4.8 lakh. Similarly, the pensions will see a hike as it will also be calculated based on these revised salaries under the UPS.
Salary calculation after implementation of 8th Pay Commission:
- The media reports said that the Central Government might prepare the 8th Pay Commission’s pay matrix by using a fitment factor of 1.92. If it comes into reality, the minimum salary for Level 1 will be increased to Rs 34,560 from the current Rs 18,000 (with a grade pay of 1800) under the 7th Pay Commission.
- Likewise, the maximum salary for Level 18 may be revised to Rs 4.8 lakh which is currently Rs 2.5 lakh, drawn by the cabinet secretaries.
Pension calculation under UPS:
- A 50% pension of the average monthly salary of the 12 months preceding superannuation will be given to the employees under the UPS and if the 8th Pay Commission is implemented in January 2026, the employees may also receive five DA hikes on their salaries by January 2029. If they get a 4% DA increase in each revision, their total DA will be 20% of the basic salary by 2029.
- Thus, the Level 1 employee, who would be getting Rs 34,560 salary after the implementation of the 8th Pay Commission, may get a pension of Rs 20,736 as the 20% DA would add Rs 6,912 to their salary of Rs 34,560. The pension, under the UPS, will be calculated as 50% of their salary plus the DA.
- Similarly, the Financial Express report said that the Level 18 employee, who are expected to draw a salary of Rs 4.8 lakh with a DA of Rs 96,000 by January 2029, would get a pension of Rs 2,88,000, which will be 50% of their last drawn salary.