Good News! Annual Increment Benefit Even for Retirees on June 30 & Dec 31, Pension to Increase

In a significant relief for Central Government employees, those retiring on June 30th or December 31st – just a day before their annual increment – will now receive a notional increment. This increment will be considered for calculating their pension, resulting in a higher pension amount post-retirement. The Department of Personnel and Training (DoPT) recently issued a directive to this effect, bringing cheer to lakhs of retiring employees.

What is this New Rule?

Previously, Central Government employees typically received their annual increment on July 1st or January 1st each year. Consequently, if an employee retired on June 30th or December 31st, they would miss out on that year’s increment by just one day. This directly impacted their pension and other retirement benefits.

However, following multiple Supreme Court rulings and extensive deliberations at various levels, the government has made a crucial amendment to this rule. According to the new decision:

• Central Government employees retiring on June 30th or December 31st will notionally receive the increment due on the following day, i.e., July 1st or January 1st, respectively.
• This notional increment will be applicable only for the calculation of their pension. This means their monthly pension amount will increase based on this.
• However, it will not apply to other retirement benefits such as gratuity or leave encashment.
• This benefit will be available to those employees who have completed the requisite qualifying service and have a satisfactory work record up to their retirement day.

Why This Change?

This step has been primarily taken in the interest of justice. For a long time, there was discontent among employees who were forced to receive a lower pension because they missed out on an increment by just one day, despite having worked diligently throughout the year. The Madras High Court, and subsequently the Supreme Court, viewed this issue from a humanitarian perspective and ruled in favour of the employees. Based on these judgments, the Central Government has taken this popular decision.

From When is it Effective?

According to various sources, this benefit may be considered effective from May 1, 2023. This means that all employees who have retired or will retire on June 30th or December 31st on or after May 1, 2023, can avail of this enhanced pension benefit. However, arrears for the enhanced pension for any period prior to April 30, 2023, will not be paid.

Important Information for Retiring Employees:

• If you are retiring on June 30th or December 31st (or have retired on or after May 1, 2023, on these dates), this new rule may apply to you.
• Contact your respective department to ensure your pension is calculated correctly.
• You can also look for the latest DoPT directive concerning this rule (issued on May 20, 2025).

This decision is undoubtedly a major victory for Central Government employees and will provide them with greater financial security in their post-retirement life.