Big Pension Hike for Central Employees: 67% Hike, 18-Month Arrears & EPS 95 Revival Announced!

Pension Hike News: Great news for over 78 lakh central government employees and pensioners across India! The government has announced a major order that will benefit current employees and pensioners alike. As part of this, employees will receive three months’ salary for January, February, and March as a free bonus. Plus, pensioners from 2006 and 2016 batches will see substantial increases in their pensions and benefits.

Some key highlights include a raise in the basic pension by up to 67%, a hike in the EPS 95 pension from ₹1,640 to over ₹7,500 plus DA, and the release of 18 months’ pending arrears totaling ₹27,8924 with an additional 5% increment. Alongside, the government has introduced new fitment factors for the 8th Pay Commission and is considering increasing the maximum Dearness Allowance (DA) from 55% to 60%.

Key Points Summary

• Central government employees get 3 months’ salary free for Jan-Mar 2024.
• Pensioners’ basic pension increased up to 67% based on new fitment factors.
• EPS 95 pension hiked from ₹1,640 to ₹7,500+ DA, addressing long-standing demands.
• Pending arrears of ₹2,78,924 for 18 months to be released with 5% increment.
• New fitment factors introduced for 2006, 2016, and 2025 pension batches.
• Dearness Allowance likely to increase from 55% to 60% soon.
• Old Pension Scheme abolished, replaced by Unified Pension Scheme (UPS).
• Arrears payment expected in July, August, and September 2024.

The Big Announcement: What Central Employees and Pensioners Should Know

The Central Government has come forward with a landmark decision benefiting a massive workforce and pensioner community. Over 78 lakh pensioners and countless employees will receive significant financial relief and upgrades in their pension structures. The government has decided to give three months’ salary as a free bonus for January, February, and March 2024. This means employees will get extra income during the first quarter without any deductions.

Moreover, the government has recognized the pressing need to increase pensions, especially for those who retired in 2006 and 2016. The basic pension for many pensioners will now see an increase of up to 67%, a huge boost for retirees who have been waiting for revisions.

The EPS 95 scheme, a contentious issue for many years, has finally been addressed. Previously, pensioners were receiving a meager amount of ₹1,640 under EPS 95. The government has now decided to increase this amount to over ₹7,500 plus applicable Dearness Allowance (DA), which is a massive relief for pensioners relying on this scheme.

Understanding the Fitment Factors and Their Impact on Pensions

One of the key elements of this announcement is the introduction of new fitment factors under the 8th Pay Commission. These factors are used to calculate pension revisions and pay hikes. The government has issued three separate fitment factors for different pension batches:

• 2.86 for 2006 pensioners
• 1.92 for 2016 pensioners
• 2.25 for 2025 pensioners (projected)

These fitment factors mean that pensioners from each batch will get pension increases proportionate to these multipliers. For example, someone retired in 2006 could see their pension multiplied by 2.86, meaning a significant increase in monthly income. This helps pensioners keep up with inflation and rising living costs.

Along with this, the government is planning to merge the Dearness Allowance (DA) with the basic pension. Currently, the DA stands at 55%, but there is a proposal to increase it further to 60%. This merge will simplify pension payments and potentially increase the monthly pension amount.

Pending Arrears and Their Payment Schedule

Another major relief for employees and pensioners is the release of pending arrears amounting to ₹2,78,924 for 18 months. This amount was held back due to previous delays and revisions. The government plans to release these arrears with an additional 5% increment, making the total payout even more beneficial.

The arrears payment is expected to be disbursed in three installments corresponding to July, August, and September 2024. This phased payment ensures that beneficiaries receive the amount smoothly without financial stress on the government.

For example, a pensioner who was due arrears from 18 months ago will finally get this lump sum added to their account, easing financial burdens and improving quality of life.

The Shift from Old Pension Scheme to Unified Pension Scheme

One of the most significant policy changes is the complete replacement of the Old Pension Scheme (OPS) with the Unified Pension Scheme (UPS). Earlier, OPS offered defined benefits based on the last drawn salary, but it was replaced by New Pension Scheme (NPS) and now UPS.

Under UPS, pensions will be calculated based on a fixed sum, depending on the length of service and last salary drawn. This means a one-time lump sum pension amount will be provided based on your service years, such as 34 or 40 years. This shift aims to streamline pension management and reduce unpredictable liabilities.

While this change might be difficult for some who preferred the old defined benefit structure, the government believes this will bring uniformity and better financial planning for pension disbursements.

What Next for Central Employees and Pensioners?

This announcement marks a major milestone in government employee welfare. With increased pensions, arrears payments, and higher DA, pensioners and employees will feel the positive impact immediately. However, some demand for reinstatement of EPS 95 and better pension benefits continues, and the government’s decisions here show their commitment to listening.

Employees should prepare to receive their arrears in the upcoming months and plan their finances accordingly. Pensioners will see their monthly income rise, easing inflationary pressures. The government’s move to merge DA with basic pay and increase fitment factors shows a forward-thinking approach to employee welfare.

Keep an eye out for official notifications and ensure that your pension details are updated to receive these benefits without delay.

Conclusion

The recent government announcement brings much-needed relief and optimism for millions of central government employees and pensioners. With up to 67% pension hikes, a substantial increase in EPS 95 benefits, and the release of long-pending arrears, the future looks brighter for retirees. The shift to the Unified Pension Scheme and proposed DA hikes further underline the government’s focus on sustaining employee welfare.

Whether you are a current employee or a pensioner, these changes will positively affect your financial wellbeing. Stay informed, check official updates, and prepare to reap the benefits of this historic decision.