8th Pay Commission Update: One of the biggest expectations of this year is the finalization of 8th Pay Commission benefits for over 1 crore central government employees and pensioners.
Many are hoping that the 8th Pay Commission could be implemented from January 2026. But there is still a long process and formalities, including recommendations, are still pending. Among many decisions is a the setting of fitment factor, which will give clear clarity on the quantum of increase in salaries and pensions.
8th Pay Commission Fitment Factor:
Among many expectations for the fitment factor, 2.86 is the most popular and eyed fitment for the 8th Pay Commission. If this is approved, the fitment factor will be higher than 2.57 under the 7th Pay Commission. But expectations of lower fitment factors like 1.83, 1.86 and 2.46 are also on the cards.
At fitment factor 2.86, central government employees and pensioners could see a huge rise of 186%.
8th Pay Commission Salary Hike:
Let’s take an example:
Pay Matrix Level 1: The minimum salary of Rs 18,000 under 7th CPC could rise to Rs 51,480 under 8th CPC at 2.8 fitment, which is a growth of a whopping 186%.
Pay Matrix Level 2: Similarly, the minimum salary of Rs 19,900 could rise to Rs 56,914 per month.
Pay Matric Level 3: Here, the minimum salary of Rs 21,700 could jump to Rs 62,062 per month.
8th Pay Commission Pension Hike
Similarly, the minimum pension of Rs 9,000 in the 7th CPC, will witness a whopping 186% jump to Rs 25,740 (Rs 9,000 x 2.86) in the 8th CPC.
Will There Be Good News In Diwali?
As per a CA named Sakchi Jain’s LinkedIn post, once again, all eyes are on the government, hoping for a Diwali announcement on the 8th Central Pay Commission (CPC). The Government Employees National Confederation (GENC), which represents lakhs of Central and State Government employees, has formally written to the Union Minister, urging immediate constitution of the 8th CPC.
Here’s why this matters, as per the TEDx speaker:
→ The 7th CPC came into effect from 1 Jan 2016.
→ By established practice, the next Pay Commission should be set up well in advance, to ensure timely implementation from 1 Jan 2026.
→ Any further delay could push the 8th CPC rollout to 2028, as it historically takes over 2 years from notification to implementation.
“As per the minister’s response, the Centre is consulting state governments and finalising the terms of reference, but no official announcement has been made yet,” she added.
However, she also added, “the current DA of 55% will reset to zero after implementation, meaning the actual hike might appear lower on paper than the jump in basic salary suggests.”
“While optimism is high for a Diwali announcement, the formal constitution of the 8th CPC is still pending,” she added, “Until then, employees and pensioners can only wait and hope this Diwali lights up their pay slips too.”
8th Pay Commission Process:
Earlier, in July, a Kotak Institutional Equities report highlighted that the process started in January 2025 with the announcement of the 8th Central Pay Commission (CPC). Subsequently, the Joint Consultative Machinery has been in discussions to finalize the Terms of Reference for the Commission, though it is yet to be finalized by the government.
It added that the usual process would be to constitute the CPC, which will then begin deliberations with central and state government officials, representatives of employee organizations and pensioners, experts, etc. After the consultations, the CPC will submit their report and recommendations to the government. The government will seek Cabinet approval to implement the recommendations.
Will the 8th Pay Commission Increase Savings?
A more underrated impact of pay commissions had been on the savings front. Adding, Kotak’s note explained that physical savings improved post the implementation of the past few pay commissions, while gross financial savings improved post 7th CPC. At the same time, we note a sharp increase in allocation toward equities in gross financial savings of Indian households, during those periods.
Hence, Kotak’s note added, “Based on our estimate of Rs2.4-3.2 trillion of additional income accrued by the central government employees, we expect an incremental Rs1-1.5 trillion of savings to be created, which may incrementally flow into a mix of physical savings, deposits and shares and debentures segments.”