8th Pay Commission: How Dearness Relief Is Calculated and What Pensioner Groups Want Changed

Pensioner and employee organisations have put forward a series of proposals on Dearness Relief (DR) before the 8th Pay Commission, including quarterly revision of DA/DR, merger of DA/DR with basic pay once it crosses 25 per cent, and a permanent wage review body. The submissions came as the commission wrapped up its three-day consultation in Chandigarh on Friday, September 18, where discussions with employee unions, pensioner groups, associations and other stakeholders centred on salary restructuring and the fitment factor. The panel will hold its next round of meetings in Bengaluru on October 7 and 8, 2026, and it is important to note that none of these proposals has been approved by the commission or the central government so far.

September 18 was also the last date for eligible organisations and stakeholders to submit documentation in the prescribed format to take part in the Bengaluru meetings, reports said. The commission had not announced a specific agenda for the Chandigarh discussions.

What Pensioner Groups Have Asked For

The Bharat Pensioners Samaj (BPS) has sought more frequent revision of DA and DR, suggesting that the rate be reviewed every quarter using a three-month average. It has also asked the commission to examine point-to-point compensation. 8th Pay Commission Fitment Factor: How 2.75 and 3.5 Multipliers Could Change Central Government Basic Pay.

The Federation of National Postal Organisations (FNPO) has proposed that DA and DR be merged with basic pay once the rate crosses 25 per cent. It has also sought a Permanent Wage Review Body and a fresh review of the fitment factor once DA/DR reaches 50 per cent.

How Dearness Relief Is Calculated

Monthly DR is linked to the basic pension and the applicable DR rate, using the formula: Monthly DR = Basic Pension × Current DR Rate ÷ 100. Gross pension is then arrived at by adding DR to the basic pension, after any relevant deduction such as the commuted portion of pension where applicable.

For example, a pensioner drawing a basic pension of INR 40,000 with a DR rate of 60 per cent would get monthly DR of INR 24,000, taking the gross amount to INR 64,000 before deductions. If a revised DR rate is announced with retrospective effect, arrears are worked out by applying the difference between the new and old rates to the basic pension for the relevant period.

What Decides the DR Percentage

The DR rate is tied to inflation and the All-India Consumer Price Index for Industrial Workers (AICPI-IW). Under the formula cited for the 7th Pay Commission framework, DR per cent = (12-month average of AICPI-IW minus 261.41) ÷ 261.41 × 100, where 261.41 is the base index value. DA/DR is generally revised twice a year. 8th Pay Commission: Nurses Demand Level 10 Pay, 3.25 Fitment Factor and OPS Restoration.

Who Gets DR and Who Does Not

DR is payable to eligible central government pensioners and family pensioners at government-notified rates, and pension-paying banks calculate the amount and credit it along with the pension. A retired pensioner who takes up re-employment generally cannot receive DR during that employment, subject to specific exceptions. DR on family pension can continue even when the beneficiary is employed, subject to applicable rules.

8th Pay Commission: Where Things Stand

The commission was set up by the central government on November 3, 2025, with an 18-month mandate. It is headed by Justice Ranjana Prakash Desai, with Pulak Ghosh as part-time member and Pankaj Jain as member-secretary. Having crossed the 10-month mark, it has held consultations in Delhi, Ladakh, West Bengal, Odisha and Uttar Pradesh besides Chandigarh, gathering views from recognised employee bodies and pensioner organisations on pay, pensions, allowances and other service matters.

Its report is expected within the 18-month mandate, with recommendations anticipated around May-June 2027. Until the commission submits its report and the government takes a decision, the existing DR framework continues to apply to eligible pensioners and family pensioners.

(The above story first appeared on LatestLY on Sep 20, 2026 10:17 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).