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The Union Cabinet, chaired by Prime Minister Narendra Modi, today (October 28) approved the Terms of Reference of the 8th Central Pay Commission.

The 8th Central Pay Commission will be a temporary body. The Commission will comprise one Chairperson, one Member (part-time), and one member-secretary. It will make its recommendations within 18 months of the date of its constitution.

It may consider, if necessary, sending interim reports on any of the matters as and when the recommendations are finalised, according to the terms of reference approved by the Cabinet.

- The economic conditions in the country and the need for fiscal prudence; - The need to ensure that adequate resources are available for developmental expenditure and welfare measures; - The unfunded cost of non-contributory pension schemes; - The likely impact of the recommendations on the finances of the State Governments, which usually adopt the recommendations with some modifications; and - The prevailing emolument structure, benefits, and working conditions available to employees of Central Public Sector Undertakings and the private sector.

The Central pay commissions are periodically constituted to go into various issues of emoluments structure, retirement benefits and other service conditions of Central Government employees and to make recommendations on the changes required thereon.

Usually, the recommendations of the pay commissions are implemented after a gap of every ten years. Going by this trend, the effect of the 8th Central Pay Commission recommendations would normally be expected from January 1, 2026.

The government had announced the formation of the 8th Central Pay Commission in January 2025 to examine and recommend changes in the salaries and other benefits of Central Government employees.

Union Minister Ashwini Vaishnaw says, "The composition, the terms of reference, and the time period of the 8th Central Pay Commission have been approved by the Prime Minister. This is a very important decision. The Commission's recommendation will cover nearly 50 lakh central government employees, including Defence Services Personnel, and nearly 69 lakh pensioners."

Pay commissions are generally formed once every 10 years to recommend the fitment factor, and other modalities for the revision of salaries of employees and pensions paid to the retirees.

The 7th Pay Commission was set up by the erstwhile Manmohan Singh-led government in February 2014, while its recommendations were implemented by the government from January 2016 onwards.