7th Pay Commission: There is good news for central government employees and pensioners. Now any central government employee who will retire on 30 June or 31 December. He will get the benefit of Notional Increment (Notional Increment Policy). Due to which his pension will increase.
7th Pay Commission: There is good news for central government employees and pensioners. Now any central government employee who will retire on 30 June or 31 December. He will get the benefit of Notional Increment (Notional Increment Policy). Due to which his pension will grow. According to the order of the Department of Personnel and Training (DOPT), employees retiring a day before the annual salary growth will get a notional salary hike for the calculation of their pension benefits.
What is this new order of DOPT?
The order of DOPT states that the employees who retire on 30 June or 31 December i.e. they are only one day away from the salary hike on 1 July or 1 January. The central government increases dearness allowance (DA) for employees every year in January and July, although it is announced much later in March and October/November respectively.
So now it is clear that employees retiring a day earlier in June and December will not suffer a loss just because they retire a day before the official annual salary hike. Because this salary hike will be considered valid for pension calculation and it will not have any effect on gratuity or other retirement benefits.
When did the salary increment system change?
Before the year 2006, the date of salary increment for every employee was different. But from January 1, 2006, it was fixed and salary increment started being given on July 1 every year. There was another change in this in the year 2016 and now two dates are considered for salary increment, January 1 and July 1. But those who retired a day earlier were deprived of this benefit.
What did the court say?
Many employees went to court over many issues. The Madras High Court ruled in favor of the employee in a case in 2017 and the DoPT implemented it. After this, many such cases came up across the country. The Supreme Court also made it clear in the year 2023 and then in 2024 that if an employee has worked honestly throughout the year, then he is entitled to a salary hike even on the last day.
In what situation will this benefit be available?
The DoPT has taken this decision after seeking opinion from the Ministry of Finance and the Department of Law. According to the order, this benefit will be available only to those whose service has been complete and satisfactory till retirement. The notional salary increment will be used only for calculating pension.
The DoPT said that the matter has been examined in consultation with the Department of Expenditure and the Department of Legal Affairs. Action may be taken to allow pay increment on 1st July/1st January to those Central Government employees who have retired/are retiring on 30th June/31st December, one day prior to the due date and who have rendered service till the date of their retirement.
It further said that as specifically mentioned in the Supreme Court orders, grant of salary increment on 1st January/1st July will be considered only for the purpose of calculation of admissible pension.
