​​​​​​​Cabinet Approves Terms of Reference for 8th Pay Commission Report Expected in 18 Months

• The Union Cabinet, chaired by Prime Minister Narendra Modi , has approved the Terms of Reference (ToR) for the 8th Central Pay Commission (CPC) , setting the stage for a comprehensive revision of pay, allowances, and pensions for government employees and retirees. The Commission will submit its report within 18 months , with implementation expected from January 1, 2026 .

Pay and Pension Revision for Over One Crore Beneficiaries

• The 8th CPC will review and recommend changes for around 50 lakh central government employees and 69 lakh pensioners . Union Minister Ashwini Vaishnaw said the ToR was finalised after consultations with ministries, states, and employee representatives. The recommendations will balance employee welfare with fiscal prudence and economic conditions.

Composition and Mandate

• The Commission will include a Chairperson , one part-time Member , and a Member-Secretary . It may also submit interim reports if needed. Its mandate covers pay levels, allowances, retirement benefits, and working conditions , while comparing compensation with public and private sector norms to ensure competitiveness.

Implementation Timeline

• Following the ten-year cycle of pay revisions, the 8th CPC’s report is expected by mid-2026 , with new pay scales likely effective from January 2026 . The previous 7th CPC , constituted in 2014, was implemented from January 1, 2016 . Until then, employees will continue receiving dearness allowance (DA) revisions twice a year.

Exam-Oriented Facts

• 8th CPC constituted : January 2025

• Report due : Within 18 months

• Implementation target : January 1, 2026

• Beneficiaries : 50 lakh employees, 69 lakh pensioners

• Previous CPC implemented : January 1, 2016

Fiscal and Administrative Impact

The Commission will consider the government’s overall fiscal health , pension liabilities, and the financial impact on both the Centre and states. It will also evaluate pay structures in PSUs and private firms to maintain parity and fairness. The move aims to enhance employee morale while safeguarding fiscal stability.