Pension New Rule: The central government has taken a big decision and given relief to those employees. Those employees who retire just a day before the annual salary hike i.e. on 30 June or 31 December. Now such employees will be given a notional increment, so that their pension can be decided properly.
Pension New Rule: The central government has taken a big decision and given relief to those employees. Those employees who retire just a day before the annual salary hike i.e. on 30 June or 31 December. Now such employees will be given a notional increment so that their pension can be decided properly. This decision is a relief for thousands of employees who till now used to miss the increment due to a difference of just one day. Although this increment will not be real, but it will provide direct benefit in pension, which is important for security after retirement.
What is notional increment?
Notional increment means that the increment received by the employee one day after retirement will be given notional, so that the pension can be calculated on the basis of increased salary. However, this increment will be considered only for pension, not for other benefits.
What was happening till now?
In 2006, the government had fixed a uniform increment date of 1 July every year. In 2016, two dates were made – 1 January and 1 July. Due to this, employees who retired on 30 June or 31 December missed the increment, which affected their pension.
In 2017, the Madras High Court gave the benefit of notional increment to a retired employee in a case. Later, the Supreme Court also accepted this right in such cases in 2023 and 2024.
What has changed now?
The Department of Personnel and Training (DoPT) has issued an office memo on May 20, 2025, making it clear that now this benefit will be available to all eligible central employees, if they have completed the entire eligible service satisfactorily.
What things need to be kept in mind?
This notional increment will be only for the calculation of monthly pension. It will not be considered for other retirement benefits like gratuity, leave encashment, pension commutation etc. If an employee’s monthly salary was Rs 79,000 on June 30 and he was going to get an increment of Rs 2,000 from July 1, then now his pension will be decided on the basis of Rs 81,000.
