Pension Hike: The government has once again made a big change and given a big relief to millions of employees of the country. Under the new rule, employees retiring on June 30 or December 31, just a day before the salary hike, will also get the benefit of an increment.
The government has decided to give notional increments to such employees so that pension calculation for them can also be done on the same basis. This decision is good news for thousands of employees who used to miss the increment earlier due to a difference of just one day. This is a historic step which will make the financial future of the employees more secure.
Now pension will be decided on this basis
This decision of the government will provide relief to thousands of employees who earlier used to miss the increment due to a difference of just one day. Dearness allowance has to be increased on January 1 or July 1. In such a situation, the annual increment is added before calculating the pension.
Based on this increment, it will be decided how much lump sum amount the employee will get on retirement and how much pension he will get after that. With this new decision of the government, the employees retiring before the increase in dearness allowance will be given the benefit of increment by adding it to their pension. This will ensure long-term financial stability.
Supreme Court also gave the green signal
In 2006, the government had fixed the date of uniform salary hike on July 1 every year. In 2016, two dates were made – January 1 and July 1. When the employees who retired just a day before this missed the increment, it also affected their pension. In 2017, the Madras High Court, while hearing a case, gave the benefit of a notional salary hike to a retired employee. After this, the Supreme Court also approved the right to get a notional increment in such cases in 2023 and 2024. This is a confirmation of the rights of employees by the judiciary.
Notional pension and other benefits
The Department of Personnel and Training (DoPT) issued an office memorandum on May 20, 2025, clarifying that now this benefit will be available to all eligible central employees, provided they have completed the service properly.
However, the thing to keep in mind is that a notional pension will be calculated only for monthly pension. It will not apply to other retirement benefits like gratuity, leave encashment, pension commutation.
Example: If an employee’s salary was ₹79,000 on June 30 and he was to get an increment of ₹2,000 from July 1, then now his pension will be decided based on ₹81,000. This is a clear guideline that will remove confusion.