The Union Cabinet, chaired by Prime Minister Narendra Modi, on October 28 approved the Terms of Reference (ToR) for the 8th Central Pay Commission, paving the way for a comprehensive review of salaries, allowances, and pensions for central government employees and retirees.
Earlier in January 2025, Union Minister Ashwini Vaishnaw had announced the government’s approval for setting up the 8th Pay Commission. However, its implementation awaited the formalisation of the ToR — the framework that outlines the Commission’s objectives and operational scope. Without the ToR, the Commission could not officially commence its work.
🔹 Key details of the 8th Central Pay Commission
- The 8th Pay Commission will function as a temporary body.
- It will consist of one Chairperson, one part-time Member, and one Member-Secretary.
- The panel will submit its recommendations within 18 months of its formation.
- It may also submit interim reports on specific matters as and when ready.
🔹 Focus areas of the Commission
While preparing its report, the Commission will take into account the following factors:
- Economic conditions and the need for fiscal prudence;
- Ensuring adequate funds for development and welfare programmes;
- The unfunded cost of non-contributory pension schemes;
- The impact on state finances, as most states follow central recommendations;
- The existing pay structure and working conditions in PSUs and the private sector.
🔹 Background: What is the 8th Pay Commission?
The Government had announced the formation of the 8th Pay Commission in January 2025 to revise the pay structure and benefits of central government employees and pensioners. The recommendations are expected to come into effect from January 1, 2026.
Central Pay Commissions are set up roughly every 10 years to review salary structures, retirement benefits, and service conditions of central government employees and to propose necessary adjustments.
🔹 Salary structure snapshot
As per estimates by Ambit Institutional Equities:
- Basic pay forms around 51.5% of total salary,
- Dearness Allowance (DA) contributes 30.9%,
- House Rent Allowance (HRA) makes up 15.4%, and
- Transport Allowance accounts for 2.2%.
The 8th Pay Commission is expected to benefit over 1 crore central government employees and pensioners — including about 50 lakh active employees (such as defence personnel) and nearly 65 lakh retirees.
Disclaimer: This article is for informational purposes only and does not constitute official government communication or financial advice.
