8th pay panel set up, report in 18 months

NEW DELHI: The Cabinet Tuesday finalised the terms of reference and the appointment of three members of the Eighth Central Pay Commission, and tasked it with submitting its recommendations within 18 months.

The panel will be headed by former Supreme Court judge Justice Ranjana Prakash Desai, with IIM-Bangalore professor Pulak Ghosh named a member and petroleum secretary Pankaj Jain designated as member-secretary, I&B minister Ashwini Vaishnaw said.

While the setting up of the pay panel was announced in Jan, ahead of the Delhi polls, the details were announced Tuesday, weeks before the assembly elections in Bihar.

The commission's recommendations will cover nearly 50 lakh central govt employees, including defence services personnel, and nearly 69 lakh pensioners. While the increase in pay and pension is expected to be rolled out from Jan 2026, Vaishnaw said the final date for implementation would be decided after submission of the interim report.

Though govt did not disclose the terms of reference, a key task before the panel is to look into unfunded cost of non-contributory pension schemes.

While the Centre has announced a shift from National Pension System to Unified Pension Scheme for those who joined before 2004, there is no estimate of its liability towards payment of pension to those who joined before that. As a result, there is no provision that is made in the budget, which is the prudent way of dealing with it. In any case, a hike in pay and allowances for employees will result in a higher pension liability too.

Besides, the pay commission has been asked to take into account the financial impact of its recommendations on states, which typically align pay and allowances of their employees with what the Centre offers.

An official statement said the panel would make recommendations after considering the economic conditions and fiscal prudence, availability of resources for development and welfare, and pension liabilities under non-contributory schemes. The panel will take into consideration prevailing emolument structure, benefits and working conditions available to employees of central public sector undertakings and private sector.