Central Government Employees To Get Notional Hike In Pension: DoPT

he central government employees who are retiring just a day before the annual increment would get a notional hike, according to the office memorandum issued by the Department of Personnel and Training (DoPT) on May 20, 2025. The Department grants a notional pay hike to retirees whose superannuation falling before annual increment.

The Department issued a circular on May 20, 2025. It reads, “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 1stJuly / 1st January to the Central Government employees who retired/are retiring a day before it became due i.e. on 30th June / 31st December 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.”

The OM clarifies that the notional hike is only for pension calculation, not for other retirement benefits. According to it, “As specifically mentioned in the orders of the Hon'ble Supreme Court, grant of the notional increment on 15t January / 1st July shall be reckoned only for the purpose of calculating the pension admissible and not for the purpose of calculation of other pensionary benefits.”

Further, there will not be a recovery of any excess pension paid already. “Pending applications including all intervention/impleadment applications shall stand disposed of in terms of this order”, reads the OM referring to the referring to the Supreme Court order in this regard.  

At present, the increment is done on two dates: July 1st and January 1st. The employees must choose either of these dates. If their retirement falls a day prior to the increment date, that is May 31st or December 31st, they will now be eligible for a notional hike in pension however with the condition that they fulfill the other requirements of service such as satisfactory work and good conduct.

DoPT issued this OM after the Supreme Court disposed of the case filed by the Railways and other petitioners in its order dated February 20, 2025.

The court also issued these directions:

The notional hike will not be applicable for any period before April 30, 2023. Only one increment will be applicable on or after May 1, 2023.

This rule will apply to the applications filed after April 11, 2023 (The date of judgement in the Union of India & Anr. Vs M. Siddaraj case)

The existing applications, which are already filed with a court (Central Administrative Tribunal/High Courts/Supreme Court) for intervention by retired employees and are pending, the OM reads, “the enhanced pension by including one increment will be payable for the period of three years prior to the month in which the application for intervention/impleadment/writ petition/original application was filed.”