UPS and 8th pay Commission: As we all know that the, Central Government Employees were dissatisfied with the New Pension System (NPS), the government combined elements of the NPS and the Old Pension Scheme (OPS) and introduced the Unified Pension Scheme (UPS) in response to a long-standing demand. With the anticipated announcement of the 8th Pay Commission in 2026, salaries could likely increase.
Level 1 could potentially reach Rs 34,560, while Level 18 could reach Rs 4.8 lakh. In a similar vein, the revised salary can also be used to compute pensions under the UPS. Employees in the NPS are expected to contribute 10% of their base wage on a monthly basis. The government matches this contribution with an additional 14%.
Features of the Uniform Pension System (UPS)
Under the UPS, all central government employees with more than 25 years of service will get 50% of their last salary for the last 12 months as pension. In addition, these employees are entitled to an increase in pension amount indexed to inflation after retirement. The minimum pension has been set at Rs 10,000 for those who worked for more than 10 years of service.
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Under the 8th Pay Commission Salary Calculation
The pay matrix for the 8th Pay Commission will likely be prepared with a fitment factor of 1.92. With the application of this fitment factor, the current minimum pay for Level 1 as per the 7th Pay Commission is Rs 18,000 at pay level 1800. Under the 8th Pay Commission, it can be increased to Rs 34,560. The maximum pay for Level 18, the highest pay for the Cabinet Secretary post in the Central Government, is currently Rs 2.5 lakh, but under the 8th Pay Commission, the maximum public sector pay may be increased to Rs 4.8 lakh with the fitment factor of 1.92.
8th Pay Commission: As per the UPS the Pension Calculation
According to UPS, pension is set at 50% of the average monthly salary for the 1 year preceding retirement. The first employees hired in 2004 will retire in 2029. When the 8th Pay Commission actually comes into effect in January 2026, the minimum salary is expected to be Rs 34,560 and the maximum salary can reach Rs 48 lakh.
Employees can also get 5 DA increments by January 2029. Assuming a 4% increment with each revision, the total increment in DA till 2029 will be 20% of basic pay. So, for a salary of Rs 34,560, a 20% DA would add Rs 6,912, and a person on this salary would get a pension of Rs 20,736. This is because it is calculated as 50% of basic pay plus DA for people at the level 1. With a maximum salary of Rs 4.8 lakh and a DA of Rs 96,000, a level 18 person would get pension of Rs 2, 88,000, which is 50 per cent of his last salary to be drawn in January 2029.
