7th Pay Commission

7th Pay Commission Retirement Pension: This New Pension Rule Could Boost Your Retirement Pay

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A new pension rule under the 7th Pay Commission could increase retirement pensions for central government employees. Find out how it works, who benefits, and what to do.

Big Relief for Pensioners Under 7th Pay Commission Retirement Pensions Set to Rise: In a major update for central government employees and pensioners, a new pension rule under the 7th Pay Commission could lead to a significant boost in monthly retirement pay. The update comes amid rising inflation and calls for better post-retirement financial security, and is being welcomed by over 68 lakh pensioners across India.

What’s the New Rule About?

The central government has recently considered or implemented a revision in pension calculation methodology. As per the new approach:

  • Pension will be calculated based on the higher of two methods:
    1. Notional Pay Method — Recalculating pension based on pay matrix as if the employee had continued in service until retirement.
    2. 50% of Last Drawn Salary — A direct 50% of the last basic salary before retirement.

The higher of the two will be considered for disbursal, which is expected to increase the pension amount for many retirees.

Who Will Benefit from This Pension Rule Change?

This rule is especially beneficial for:

  • Central Government employees who retired before 2016
  • Pensioners with long years of service but low notional pay
  • Employees in lower pay bands or who missed promotions
  • Family pensioners who receive benefits from the deceased government staff

It ensures that no retiree is at a disadvantage due to outdated pay scales or past anomalies in promotion.

How Pension Is Now Calculated Under 7th CPC

The two pension calculation methods under 7th CPC include:

  1. Notional Pay-Based Formula:
    • Pay is fixed in 7th CPC matrix based on last held post
    • Pension = 50% of the revised notional pay
  2. Actual Last Drawn Salary Formula:
    • Pension = 50% of last drawn basic salary
    • Especially useful for those who retired at higher positions with better last salaries

The government has directed that whichever calculation results in a higher pension amount will be applied.

Impact on Monthly Pension Payouts

With this new rule, retirees can expect:

  • Monthly pension hike between ₹2,000 to ₹12,000, depending on post and tenure
  • Increased Dearness Relief (DR) as it is calculated on the revised pension
  • Better gratuity and commutation value for recent retirees

For example, someone drawing ₹34,000 monthly pension may now receive ₹40,000+ based on the higher revised calculation.

What Pensioners Should Do

  1. Check your revised PPO (Pension Payment Order) issued by the bank or central authority
  2. Contact your PAO (Pension Accounting Office) or visit https://pensionersportal.gov.in
  3. Raise a grievance or request re-computation if your pension hasn’t been updated
  4. Use the SPARSH portal for online pension-related services

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