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Little Salary Increase, Huge Pension Surprise: Central Govt Employees Set To Gain More Than Expected
The central government has clarified that certain employees retiring on June 30 or December 31 are eligible for a notional increment affecting pension calculations. Though not paid during service, this increment is added to calculate pensions. Eligible retirees from January 1, 2006, onwards receive this benefit if they meet conduct and performance criteria. The pension hike became effective from May 1, 2023, including back payments for some cases. Those involved in legal proceedings may get enhanced pensions retroactively. Conflicting lower court orders will be challenged to ensure consistency, but already settled cases won't be reopened, offering much-needed pension clarity and relief.
What is the Notional Increment Benefit?
The notional increment refers to an increment that is not actually paid during service but is considered solely for calculating pension benefits. This ensures pension calculations reflect the increment employees would have received if they had continued in service beyond June 30 or December 31.
Who is Eligible for the Notional Increment?
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Central government employees who retire or have retired on June 30 or December 31, on or after January 1, 2006, and who meet the qualifying conditions of good conduct and satisfactory performance, are eligible for the notional increment. This is based on DoPT’s Office Memorandum dated February 20, 2025.
Clarification Issued by DoPT on February 20, 2025
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The Department of Personnel and Training (DoPT) clarified that notional increments granted on July 1 or January 1 to employees retiring on June 30 or December 31 respectively, will be counted only for pension calculation and not for other pensionary benefits.
Effective Date for Monetary Benefits
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The actual increase in pension due to the notional increment started from May 1, 2023, for all eligible pensioners who retired on or before April 30, 2023. Those with existing court orders will have their pensions adjusted as per those specific orders.
Special Cases Involving Legal Proceedings
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For retired employees who have filed applications such as intervention, impleadment, writ petitions, or original applications before tribunals or courts, the enhanced pension including one increment will be payable for the three years prior to the filing of such applications.
Addressing Conflicting Lower Court Orders
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Any contradictory orders from lower courts that conflict with the Supreme Court’s February 20, 2025 decision or violate DoPT conditions will be challenged in higher courts to maintain uniformity in pension calculations.
Re-opening of Previously Decided Cases
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Cases that have already been implemented under earlier orders are not required to be re-opened, as per the Department of Posts order issued on July 17, 2025.
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