8th Pay Commission: Why higher fitment factor could raise Centre’s NPS and UPS burden - Moneycontrol.com

Published 6 June 2026 · india

India has roughly 55 lakh serving central government employees and an estimated 69 lakh pensioners who would be impacted by the recommendations of the 8th

India has roughly 55 lakh serving central government employees and an estimated 69 lakh pensioners who would be impacted by the recommendations of the 8th Central Pay Commission. Representative Image 8th Central Pay Commission to review pay for 50 lakh employees Fitment factor hike could add Rs 2 lakh crore to government costs Employees may get option to choose NPS or UPS at retirement Did our AI summary help? With the 8th Central Pay Commission set to review pay and pension structures for 50.14 lakh central government employees and around 69 lakh pensioners, questions are being raised over whether the government can accommodate the steep fitment factors sought by employee organisations. While employee unions have sought fitment factors, ranging from 3 to over 5, pension experts argue that such demands may not align with fiscal realities, especially given the government's growing obligations under the contributory pension schemes, including Pension System (NPS) and the Unified Pension Scheme (UPS). According to pension expert Manjeet Singh Patel, President of the All India NPS Employees Federation, the Central government's biggest challenge is not merely funding higher salaries but also meeting the associated increase in pension-related contributions. Realistic salary hike Singh argues that even if the government were to provide a fitment factor close to 2, the increase in overall salary outgo could still be substantial.

Considering an employee with a basic pay of Rs 100 who currently receives Rs 160 per month, after including 60 percent dearness allowance. When the basic pay is doubled to Rs 200 through a revised fitment factor, the employee's pay would rise by Rs 40 over the existing Rs 160, implying an effective increase of about 25 percent. This suggests that even a fitment factor that is significantly lower than the figures demanded by employee associations could result in a substantial increase in government expenditure. “It is estimated that the government will face over Rs 2 lakh crore burden,” Singh said. Government’s rising expenditure India has roughly 55 lakh serving central government employees and an estimated 69 lakh pensioners who would be impacted by the recommendations of the 8th Central Pay Commission. The 7th CPC raised the minimum basic salary pay of employees to Rs 18,000 per month. According to Singh, the challenge for the 8th CPC extends beyond salary revisions, as the Central government also contributes to retirement schemes for millions of employees. Besides increasing salaries, it would also raise contributions to pension schemes, which are linked to employees' basic pay and dearness allowance. He estimates that among serving central government employees, around 32-33 lakh are covered under the NPS, wherein they contribute 10 percent of their basic pay and DA, while the government contributes 14 percent.