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In a move that could bring significant financial relief to lakhs of retired government employees, a key change in pension rules is being proposed under the upcoming 8th Pay Commission. The change revolves around reducing the commuted pension restoration period from 15 years to 12 years—a longstanding demand by pensioners’ unions and retiree associations across India.

If approved, this reform would allow pensioners to receive their full monthly pension three years earlier than the current policy permits, making a major difference amid rising living costs.

📌 What Is Commuted Pension and Why It Matters?

When a government employee retires, they are given the option to withdraw a portion of their pension as a lump sum. This process is known as commutation of pension. For example, if a retiree is entitled to a monthly pension of ₹20,000 and opts to commute 50% of it, they receive ₹10,000 monthly and a lump sum of the remaining ₹10,000 (multiplied by a commutation factor).

Currently, this deduction continues for 15 years, after which the full monthly pension is restored. Retirees argue that 15 years is an excessively long period, especially as medical costs, inflation, and cost of living continue to rise.

🧾 What Is Being Proposed?

The National Council (JCM)—a joint consultative body representing Central Government employees—has submitted a formal memorandum to the government urging it to reduce the commuted pension restoration period from 15 years to 12 years.

According to media reports, this issue is now likely to be included in the Terms of Reference (ToR) of the 8th Pay Commission. If this happens, it would pave the way for a policy change that directly benefits lakhs of pensioners.

💬 Why Are Pensioners Demanding the Change?

Several retirees and unions argue that:

• 15 years is too long to wait for full pension restoration.

• With inflation constantly rising, a delay in pension restoration hurts financial stability.

• Reducing the duration to 12 years would help pensioners manage daily expenses more easily, especially in their later years when medical costs tend to rise.

The demand has now reached the Cabinet Secretary via the National Council JCM, highlighting it as a top priority among other suggested reforms.

🕒 Status of the 8th Pay Commission

The 7th Pay Commission is set to complete its tenure on December 31, 2025. While a new Pay Commission typically comes into effect every 10 years, the 8th Pay Commission is expected to begin from January 1, 2026.

However, the government has not yet announced the members of the new commission, nor has it finalized its Terms of Reference (ToR). This delay has raised concerns about a possible pushback in its implementation timeline.

👥 Who Will Benefit from the Change?

If the proposed reduction from 15 to 12 years is implemented:

• Lakhs of central government pensioners will receive their full pension 3 years earlier.

• It will offer enhanced monthly income during a critical stage of post-retirement life.

• It could also influence state government pension policies, which often align with central norms.

🔎 What Happens Next?

The government is said to be seriously considering the proposal. Inclusion of this reform in the 8th Pay Commission’s ToR would mark the first official step toward implementation.

Meanwhile, retiree groups are urging authorities to expedite the formation of the 8th Pay Commission and begin addressing urgent pension-related reforms that impact the financial well-being of India’s senior citizens.

🔔 Conclusion

The proposal to reduce the commuted pension restoration period from 15 to 12 years under the 8th Pay Commission could be a game changer for government retirees. If adopted, it would bring quicker financial relief and align pension policies with the current economic realities facing senior citizens.

As the government gears up for the rollout of the 8th Pay Commission, all eyes are now on the Terms of Reference, which will determine the direction of crucial salary and pension reforms for the next decade.