Central Government Employees to Receive Notional Increment for Pension Calculation, Says Government Order

 New Delhi, May 21, 2025 – Central government employees retiring a day before their scheduled annual pay hike will now be eligible for a notional increment to calculate their pension, according to an official order issued by the Ministry of Personnel, Public Grievances and Pensions. The decision aligns with a recent Supreme Court ruling dated February 20, 2025, addressing the issue of pension benefits for employees retiring just before their increment date.

The order clarifies that employees retiring on June 30 or December 31, a day before the biannual increment dates of July 1 or January 1, will be granted the notional increment for pension calculations, provided they have completed the requisite qualifying service with satisfactory work and good conduct at the time of superannuation. The directive states, "It is advised that in pursuance of the above referred order dated 20.02.2025 of the Hon'ble Supreme Court, action may be taken to allow the increment on July 1/January 1 to the Central government employees who retired/are retiring a day before it became due, i.e., on June 30/December 31, and have rendered the requisite qualifying service as on the date of their superannuation with satisfactory work and good conduct for calculating the pension admissible to them."

This move is expected to benefit numerous retiring employees by ensuring their pension reflects the increment they would have received had they retired a day later. The government’s decision underscores its commitment to implementing the Supreme Court’s directive and addressing long-standing concerns about pension disparities for employees retiring on the cusp of their annual increment.