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In the latest update, the government has amended the CCS (Pension) Rules, 2021. The major change is related to the transformation of government employees from central to public sector undertakings (PSU).

However, reports have emerged that these employees may no longer get the benefits of dearness allowance or pay commissions, as CCS rules are part of the Finance Bill.

Accordingly, there is confusion related to whether government employees will receive 8th Pay Commission or 7th Pay Commission benefits along with dearness allowance under the new rules.

No DA Hike, 8th Pay Commission Benefits for Retired Employees?

Reports are stating that pensioners will not get the benefit of a surge in dearness allowance or benefits of future pay commissions, such as the 8th Pay Commission, which is expected to be implemented from January 1, 2026.

Will Pensioners Truly Not Get DA Hike, 8th CPC Benefits Under New Rules?

Amendment of Rule 37 of CCS (Pension) Rules, 2021:

On May 27, the Department of Pension and Pensioners' Welfare in consultation with the Department of Expenditure, Ministry of Finance, Department of Personnel & Training, Department of Legal Affairs, Legislative Department and Comptroller & Auditor General brought out an amendment in Rule 37 (29)(c) of CCS (Pension) Rules, 2021.

The amended Rule 37(29C) is as follows:

"... the dismissal or removal from service of the public sector undertaking of any employee after his absorption in such undertaking for any subsequent misconduct shall lead to forfeiture of the retirement benefits for the service rendered under the Government also and in the event of his dismissal or removal or retrenchment, the decision of the undertaking shall be subject to review by the Ministry administratively concerned with the undertaking.

For this Rule, the relevant provisions of Rules 7 and 8 read with Rule 41 and Rule 44(5)(a) &(b) would be applicable analogous as applies to a Government servant under these Rules"

This is a huge change from the previous rule under the CCS pension, where PSU employees were eligible to receive retirement benefits despite the dismissal.

As per the Finance Express report, coming to the reports' claim on allegedly denying retirees pension and other retirement benefits under new rules in the Finance Act 2025, the change in Rule 37 has nothing to do with dearness allowance or pay commission benefits.

Confusion On No More DA Hikes or Pay Commission Benefits Under Finance Act 2025:

The Finance Bill, 2025 was passed by Lok Sabha on March 25, 2025.

However, confusion emerged after the opposition party Congress claimed that there is a hidden agenda of the central government regards to latest amendments in Finance Bill rules for pensions. The opposition is alleging that the Centre could deny the benefits of the 8th Pay Commission to those who retired before January 2026.

The opposition's claim arose after Lok Sabha passed Validation of the CCS (Pension) Rules and Principles for expenditure on Pension liabilities from the Consolidated Fund of India under Finance Bill 2025, on March 25, 2025.

The bill that was passed said, the validation legislation validates the principle that without prejudice to the Pension Rules, the Central Government has the authority to establish distinctions among pensioners as a general principle and that a distinction may be made or maintained amongst the Pensioners, which may emanate from the accepted recommendations of the Central Pay Commissions, and in particular the distinction may be made based on the date of retirement. The legislation has been made effective from 1.6.1972 thereby validating all Rules made under Article 309 of the Constitution for CCS (Pension) Rules, 1972, CCS (Pension) Rules, 2021, CCS (Extraordinary Pension) Rules, 2023 including all instructions issued thereunder as amended from time to time, as reported by PIB.

However, Finance Minister Nirmala Sitharaman during her reply in Rajya Sabha recently, clarified that the recent amendments to pension rules in Finance Bill are just validation of the existing policies, but do not change the benefits for civil or defence pensioners.

Sitharaman fired back at the opposition, by highlighting that the latter's 6th Pay Commission held a distinction between pensioners depending on the January 1, 2006 cutoff. However, under the PM Modi government, the 7th Pay Commission has ensured a parity between pensioners who retired pre-2016 and post-2016. She emphasized that the 8th Pay Commission will further enhance salaries and benefits to both government employees and retirees who receive pensions.

Hence, as per the latest clarification of Sitharaman, retired employees will get the DA hike and 8th Pay Commission benefits.

8th Pay Commission Expectations:

Many recommendations have been given to the government for the 8th Pay Commission. For instance, the staff side of the National Council-JCM believes that the fitment factor should be at least 2 under 8CPC. Many reports have stated that experts are predicting a 1.92 2.08 or 2.86 fitment factor.

If either of the fitment factors of 2, 2.08 or 2.86 gets the government's approval, then central government employees' salaries will increase by 100% or more. The same will be the case with pensioners as well!

Currently, under the 7th Pay Commission, the fitment factor for employees and pensioners is 2.57. While the minimum basic pay is Rs 18,000 for government employees and Rs 9,000 for pensioners.