Retired a day before your annual pay hike?You might still get pension boost

Employees retiring just before their annual increment will now get a notional hike for pension, no arrears, but a big win for post-retirement income.

Central government employees who retire just a day before their annual increment date will now be eligible for a notional increment, solely for the purpose of calculating their pension, the government has said.

 

According to news agency Press Trust of India (PTI), the step was in compliance with a Supreme Court directive issued on February 20, 2025.

 

Applies to employees retiring on June 30 or December 31

 

The Ministry of Personnel, Public Grievances and Pensions has issued an order stating that employees who superannuate on June 30 or December 31, just before their eligible increment dates of July 1 or January 1, will now be granted a notional increment for pension calculation.

 

The benefit will be extended only if the employee has:

 

• Completed the required qualifying service 
• Maintained satisfactory service and good conduct at the time of retirement 
• Only for pension, not other benefits

 

Citing the ministry’s communication, PTI reported that the notional increment will be considered only for pension calculation purposes.

 

“As specifically mentioned in the orders of the apex court, the grant of the notional increment on January 1/July 1 shall be reckoned only for the purpose of calculating the pension admissible, and not for the purpose of calculation of other pensionary benefits,” the ministry said, according to PTI.    Calculate Income Tax: Income Tax Calculator Tool

 

The benefit will be effective only from May 1, 2023, in line with another Supreme Court order. PTI noted that no arrears will be paid for any period before this date.

 

Employee unions hail the move

 

The decision has been welcomed by employee unions. PTI quoted the All India NPS Employees Federation as expressing gratitude to the government.

 

The Federation’s national president Manjeet Singh Patel told PTI that the step would bring long-pending relief to thousands of government staff. He also urged the government to extend the benefit to employees under the National Pension System (NPS) who opt for the unified pension scheme.

 

This development ensures that government servants retiring just before their scheduled annual raise are not penalised in their pension calculations due to timing, an issue that had led to multiple legal disputes in recent years.   (with PTI inputs)