The Union Cabinet adopted the Terms of Reference (ToR) for the 8th Central Pay Commission (CPC) on Tuesday. This means that pay and pensions for about 1.2 crore people, including 50 lakh central government employees and 69 lakh retirees, will be changed.
Ashwini Vaishnaw, the Minister of Information and Broadcasting, announced the decision at a Cabinet meeting. He added that the Commission’s recommendations are due in 18 months, and the new pay structure will probably go into force on January 1, 2026.
How the Panel is Made Up
Justice (Retd.) Ranjana Prakash Desai, a former Supreme Court judge, will be in charge of the 8th Pay Commission.
Pulak Ghosh has been named a member of the panel, and Pankaj Jain will be the member-secretary.
Consultations and the Framework
Minister Vaishnaw said that the ToR is now final because there were many talks with other ministries, state governments, and the staff side of the Joint Consultative Machinery.
The government told Parliament earlier this month that it had asked for input from important groups, such as the defense and home ministries, the Department of Personnel and Training (DoPT), and a number of state governments, before making the Commission’s framework official.
Timeline for Implementation
Every ten years, the pay commissions look at and suggest changes to the salaries, allowances, and pensions of central government workers.
The 7th Pay Commission was created in February 2014, and its suggestions went into effect on January 1, 2016.
The next 8th Pay Commission will have a similar schedule, with its recommendations going into effect on January 1, 2026, after the government reviews and accepts them.
Effects & Financial Consequences
The 8th CPC is projected to have a big effect on government spending and increase the disposable income of millions of workers and retirees once it is put into place.
The new compensation system is meant to keep up with inflation and improve living standards, which is in line with the government’s overall goal of keeping pay and the cost of living in line.
To deal with the loss of real income caused by inflation, the Dearness Allowance (DA) will still be given out based on the most recent inflation data. This happens every six months.
Background
The Cabinet approved the creation of the 8th Pay Commission in January 2025. This started the process of raising salaries in all central government ministries. The government’s long-standing policy of making pay changes every ten years to keep pay levels fair between employees and pensioners is in line with this decision.