New Delhi: In a significant move for central government employees and pensioners, the Union Cabinet, chaired by Prime Minister Narendra Modi, approved the establishment of the 8th Pay Commission on Thursday. The new commission will be tasked with revising the salary structures and allowances for government employees and determining pension enhancements for retirees.

Union Minister Ashwini Vaishnaw confirmed the Cabinet’s decision, stating that the process to appoint a chairman and two members for the commission will begin soon. He added that comprehensive consultations would be conducted with central and state governments as well as other key stakeholders to ensure balanced recommendations.

Pay commissions are constituted approximately every decade to revise salary frameworks for central government personnel. Each commission operates with a defined term of reference (ToR), addressing various aspects of remuneration, allowances, and pensions. The most recent, the 7th Pay Commission, was constituted in 2016, and its recommendations are set to remain in effect until 2026.

Currently, more than 49 lakh central government employees and around 65 lakh pensioners benefit from the pay commission’s directives. However, employees of public sector undertakings (PSUs), autonomous bodies, and gramin dak sevaks fall outside the scope of these commissions, with separate pay scales defined by their respective organizations.

The 7th Pay Commission brought notable revisions, including an increase in the minimum basic pay from ₹7,000 to ₹18,000 per month. The fitment factor, a key element in calculating salaries and pensions, was set at 2.57, though employee unions had sought a higher factor of 3.68. Maximum salaries rose to ₹2,50,000, while pensions capped at ₹1,25,000 per month.