New Delhi, June 28: Central government employees and pensioners are anticipating a major relief under the upcoming 8th Pay Commission, which is expected to recommend reducing the commuted pension restoration period from 15 to 12 years—a long-standing demand of the employee unions. The issue, raised by the Staff Side of the National Council (JCM), is now likely to be included in the Terms of Reference (ToR) of the new commission, expected to be implemented from January 1, 2026.

Commuted pension allows retiring government employees to take a portion of their pension as a lump sum. However, in return, a portion of their monthly pension is deducted for 15 years as recovery. After this period, the full pension is restored. Employee unions argue that the 15-year rule is outdated and financially unjust. With interest rates falling over the years, the amount recovered by the government far exceeds what was originally paid out, leaving pensioners at a disadvantage. 8th Pay Commission To Triple Medical Allowance and Raise Minimum Salary to INR 27,000? Check Details.

Reducing this period to 12 years would allow retirees to regain their full pension earlier, helping them manage rising medical costs, inflation, and other post-retirement expenses. The matter gained traction during the 34th SCOVA meeting held in March 2025, where officials from the Finance Ministry acknowledged the need for a fairer system. 8th Pay Commission Update: What Changes Can Central Govt Employees Expect in Basic Pay and Allowances?

The 7th Pay Commission’s term ends on December 31, 2025, and while the 8th Pay Commission is due from January 2026, its members and ToR have not yet been finalised. This delay raises concerns about timely implementation, but the inclusion of the commuted pension issue in the discussion offers renewed hope.

If approved, the reform could also benefit existing pensioners, especially if implemented with retrospective effect. Overall, the potential change is not just a financial adjustment but a long-overdue recognition of the contributions made by government employees throughout their careers.

(The above story first appeared on LatestLY on Jun 28, 2025 09:21 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).