Big Relief on 8th Pay Commission! Centre Clarifies Stance on Pension and DA Merger, Know Details

8th Pay Commission: Finally, a sigh of relief for millions of central government employees and pensioners. The confusion surrounding the Terms of Reference (ToR) of the 8th Pay Commission, which had been brewing for the past few weeks, has been officially cleared by the Finance Ministry. The dark clouds of uncertainty that hovered over nearly 70 lakh pensioners have been dispelled following a statement made in the Rajya Sabha. However, despite this positive development, disappointment continues regarding the demand for merging Dearness Allowance (DA) with Basic Pay.

Here is a detailed breakdown of the current situation based on the central government’s recent announcement and the information provided in Parliament.

Why Was There Confusion Regarding Pension Revision?

When the formation of the 8th Pay Commission was announced on November 3, 2025, it was initially welcomed by all. However, issues arose when the detailed Terms of Reference (ToR) for the commission were published. Unlike previous Pay Commissions, which explicitly mentioned the revision of both salaries and pensions, the specific phrase “pension revision” was missing from the text this time. This omission triggered severe anxiety among employee unions and retiree associations.

Many feared that the government, citing fiscal prudence, might not introduce significant changes to the pension structure this time or might deviate from established norms. The concerns were further amplified by references to the “unfunded cost of non-contributory pension schemes” in the notification.

Clear Message from the Centre in Rajya Sabha

Putting an end to all these speculations and concerns, Minister of State for Finance Pankaj Chaudhary clarified the government’s stance. In a written reply in the Rajya Sabha, he unequivocally stated that the 8th Pay Commission will make recommendations not only on pay and allowances but also on issues related to Pension.

Following the Minister’s statement, it is now clear that the tradition of maintaining parity between the income of serving employees and retirees will continue under the 8th Pay Commission. This clarification is being viewed as a significant victory for employee unions and pensioner associations.

What Did the Centre Say About DA Merger?

While there is good news regarding pensions, the demand concerning Dearness Allowance (DA) remains unfulfilled for now. Currently, the DA for central employees has crossed the 50 percent mark. As per convention or previous practices, there was a strong demand to merge this 50 percent DA with the Basic Pay.

However, answering a query in the Rajya Sabha, the government explicitly stated, “No proposal regarding merger of the existing Dearness Allowance with the Basic Pay is under consideration at present.”

This implies that employees will likely have to wait until 2027, when the 8th Pay Commission is expected to submit its full report, for any major structural change in salary or the merging of DA with Basic Pay.

Current Situation at a Glance

Below is a brief summary of the central government’s recent stance and what employees have gained or lost:

Expectations Going Forward

For pensioners, this announcement is undoubtedly a major relief. Without regular pension revision, a huge disparity in income would have emerged between older and newer retirees. The government’s assurance ensures that the principle of ‘parity’ remains intact. However, employee unions are not halting their efforts just yet. Their focus now shifts to other unresolved issues such as the NPS vs OPS debate, the 18-month DA arrears, and compassionate appointments.

It remains to be seen what steps the government will take regarding these pending demands in the coming days.