7th Pay Commission: From salaries and insurance to pensions, what all has changed in the 10 years since the 7th Pay Commission?
A crucial period is about to begin for central government employees and pensioners. In eight days, on December 31st, the term of the Seventh Pay Commission will end, which has brought about several major changes in the last 10 years, from salary structures to allowances and pensions. From determining the minimum wage to rules regarding the fitment factor, HRA, gratuity, and MACP, these changes have directly impacted the income and future planning of millions of employees.
Now, all eyes are on the Eighth Pay Commission. Questions are being raised about how much the salary increase will be, what the fitment factor will be, and what relief pensioners will receive. These questions are crucial because they will affect the pockets of more than 50 lakh employees and approximately 69 lakh pensioners. So, let's first understand what has changed in the last 10 years since the implementation of the Seventh Pay Commission, and what are the expectations from the Eighth Pay Commission? Let's find out.
Key recommendations of the 7th Pay Commission that had an impact for 10 years:
1. Date of Implementation:
The recommendations of the 7th Pay Commission were implemented from January 1, 2016. Changes in salary, allowances, and pensions were based on this.
2. Minimum Wage:
Under the Aykroyd Formula, the minimum wage for central government employees was fixed at ₹18,000 per month.
3. Maximum Salary:
The maximum salary for officers in the Apex Scale was fixed at ₹2.25 lakh per month, and for the Cabinet Secretary and officers of equivalent rank, it was fixed at ₹2.50 lakh per month.
4. New Pay Structure:
The old system of pay bands and grade pay was abolished, and the Pay Matrix system was implemented. Now, an employee's status is determined by the level in the Pay Matrix, not by the grade pay.
5. Fitment Factor:
A uniform fitment factor of 2.57 was applied to all employees, increasing basic salary.
6. Annual Increment:
The annual salary increment rate was kept at 3 percent.
7. Changes in MACP:
The performance benchmark was increased from 'Good' to 'Very Good'.
Previously, increments were not granted if the prescribed standards for MACP or regular promotion were not met within 20 years.
No other major changes were made to MACP.
8. Changes in Allowances:
A total of 52 allowances were abolished, and 36 allowances were merged into new or existing allowances. A 9-tier matrix was implemented for risk and hardship allowances.
9. House Rent Allowance (HRA):
HRAs for X, Y, and Z cities were fixed at 24%, 16%, and 8% respectively. A provision was made for further revisions when the DA crosses 50% and 100%. Its scope was extended to Defence, CAPF, and Coast Guard personnel.
10. Advances and HBA:
All interest-free advances were abolished. Only Personal Computer Advance and House Building Advance (HBA) continued. The HBA limit was increased from ₹7.5 lakh to ₹25 lakh.
11. Group Insurance Scheme:
Both the contribution amount and insurance cover under the Central Government Employees Group Insurance Scheme (CGEGIS) were increased.
12. Medical Facilities:
A health insurance scheme was introduced. The scope of CGHS was extended to pensioners residing outside the CGHS area and postal pensioners.
13. New Pension Calculation:
A new pension calculation was implemented for civil, CAPF, and Defence personnel who retired before January 1, 2016.
14. Increased Gratuity:
The maximum limit for gratuity was increased from ₹10 lakh to ₹20 lakh. A provision was made for a further 25% increase when DA crosses 50%.
15. Disability Pension (Defence):
Disability pension for the armed forces was brought back under the slab system.
16. Ex-Gratia Compensation:
The lump-sum amount payable to the family of an employee who dies in the line of duty has been revised.
17. New Pension System (NPS):
Considering the grievances related to NPS, improvements and a robust grievance redressal mechanism have been recommended.
18. Regulatory Bodies:
A consolidated pay package has been fixed for the Chairpersons and Members. Pension is not deducted from this salary. For some regulatory bodies, the salary has been fixed at ₹4.5 lakh per month for the Chairperson and ₹4 lakh per month for the Members, which will increase by 25% when the Dearness Allowance (DA) increases by 50%.
19. Performance-Linked Pay:
Performance-Related Pay (PRP) has been implemented, and the old bonus system has been incorporated into it.
Will the 8th Pay Commission be implemented from January 1, 2026?
The government has not yet fixed a definite date for this. Minister of State for Finance Pankaj Chaudhary, in a written reply to a question asked in the Lok Sabha on December 8, 2025, clarified that the implementation of the 8th Pay Commission from January 1, 2026, has not been confirmed. It may take approximately 18 months after the notification for the commission's report to be released.
This means that the chapter of the 7th Pay Commission is now closing, and employees are now looking forward to the 8th Pay Commission, with new hopes regarding the fitment factor, salary, and pension.
Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
