Central government employees who retire a day before their annual pay hike date will now be eligible for a notional increment to calculate their pension.
This decision comes in response to a Supreme Court ruling on the matter.
Notional Increment Approved for Central Government Employees Retiring Just Before Annual Pay Hike Date
The Prime Minister has approved the formation of the Eighth Pay Commission for central government employees.
According to the official order, “Action may be taken to allow the increment on July 1/January 1 to the Central Government employees who retired/are retiring a day before it became due, i.e., on June 30/December 31, and have rendered the requisite qualifying service as on the date of their superannuation with satisfactory work and good conduct for calculating the pension admissible to them.”
Current rules let employees choose either July 1 or January 1 as their increment date.
As per the Supreme Court’s clarification, the notional increment granted on January 1 or July 1 is to be used only for pension calculation and not for any other pensionary benefits.
The official order was issued on Tuesday, May 20, 2025, by the Personnel Ministry.
Single Increment Payable to Central Government Employees on or After May 1, 2023
In reference to another Supreme Court order, the Ministry stated that “one increment will be payable on and after 01.05.2023.”
It also clarified that “enhanced pension for the period prior to April 30, 2023, will not be paid.”
This directive has been communicated to all Central Ministries.
The All India NPS Employees Federation welcomed the move and thanked the Centre for the decision.
The federation’s national president, Manjeet Singh Patel, also urged the government to extend the notional increment benefit to employees under the National Pension System (NPS).
The number of Central Government employees stands at approximately 48.66 lakh.
