While the discussion of the so called “fitment factor” and of the Dearness Allowance is in full swing – in particular after the official press release of the 8th Pay Commission of 31st December last – a further relevant point of the talks with the employees – especially the retired ones – is gaining more and more momentum.

Age-based pension structure:
“Full pension would enable a person to lead a decent and dignified life after retirement and to support minimum two member family units. Hence full pension should be fixed at 67% of Last Pay Drawn (LPD) or Average of the last 10 months emoluments whichever is beneficial to employee. At present it is fixed at 50% of LPD. This 50% is not sufficient to support even single person let alone two member family units”, NC-JCM in its said memorandum to the 8th CPC.

“5% additional pension for every five years of delay in retirement beyond the age of 65 years as suggested by the Parliament Standing Committee on Personnel, Public Grievances, Law and Justice in its Report (17(11)2014) submitted to Lok Sabha on 09.12.2014. The same may be incorporated in the pension structure as under:—

65 years: 70% of last pay drawn (LPD)
70 years: 75% of LPD
75 years: 80% of LPD
80 years: 85% of LPD
85 years: 90% of LPD
90 years: 100% of LPD
Choosing between OPS, NPS, or UPS
It was also reported a few weeks ago that employee representatives were keen to get more flexibility on pension while the rest of the negotiations were in limbo.

According to employee representatives, discussions regarding higher pension have gained traction in recent weeks. They could opt for retirement benefits as are available under the OPS, NPS, or even proposed Unified Pension Scheme (UPS). The UPS would have NPS like contribution along with returns from market and also have assured pension benefits.

The Old Pension Scheme (OPS): This is a defined-benefit pension scheme, where employees get fixed pension in the form of last drawn salary plus dearness allowance. Entire pension is paid by Government of India from its treasury and employee does not contribute towards pension fund during service.

The National Pension System (NPS) is a contribution based pension system where the Employee pays from his salary on a monthly basis and Government also pays to the pension fund of Employee while he is in employment on matching contribution basis.

However a section of critics would not like to have the retirement benefit to depend upon the market fluctuations.

Unified Pension Scheme (UPS): This pension scheme aims to merge the best of OPS and NPS for its stakeholders. It involves NPS like contribution by employee along with matching contribution by government and at the same time guaranteed pension to retiree as promised.

Significant is the fact that the recommendations of 8th Pay Commission shall have impact on over 1.1 Crore beneficiaries including over 10 lakh Central Government employees and over 82 lakh retired employees and their dependents.

So far India has seven Pay Commissions, established every ten years, since the first was set up in January 1946. The 8th Pay Commission was established on 3rd November, 2025 and its report is likely to affect more than 1.1 crore beneficiaries of Central Government employees and pensioners and their families.