Key Takeaways
- The federal government has notified a 7 percent rise in pensions effective July 1, 2026.
- This increase applies to retired civilian and military personnel as well as their family members.
- Pensioners retiring on or after July 1, 2026 will receive both the 15 percent and 7 percent increases.
The federal government has announced a significant increase in pensions for all federal government pensioners, effective from July 1, 2026. According to an Office Memorandum issued by the Finance Division, this 7 percent rise will be calculated on the baseline pension, which was introduced under the revised pension policy.
This notification extends relief to retired civilian employees, armed forces personnel, civil armed forces personnel, and their family members who receive pensions. The increase is applicable to all civil pensioners of the federal government, including those paid from defence estimates and retired military personnel.
The Finance Division has clarified that this latest increase will be admissible on family pensions granted under various schemes such as the Pension-cum-Gratuity Scheme, 1954, the Liberalized Pension Rules, 1977, and the Central Civil Services (Extraordinary Pension) Rules. Additionally, it will also apply to compassionate allowances under CSR-353.
Pensioners retiring on or after July 1, 2026 will continue to receive both the 15 percent increase granted in 2022 and the 7 percent increase announced in 2025. These increases are calculated based on the baseline pension formula introduced under previous notifications issued in January, July, and August 2025.
The government has maintained its long-standing exclusion of certain components from annual pension enhancements. Specifically, the Special Additional Pension granted in lieu of pre-retirement orderly allowance or the monetized value of a driver or orderly will not be included in this latest increase.
Under the revised methodology, annual pension increases are calculated on the baseline pension instead of the enhanced pension amount. This change aims to streamline future pension increases and ensure consistency in the calculation process.
The Finance Division has also stated that where pension liabilities are shared between the federal government and another government under the applicable provisions of the Accounts Code, the additional pension liability arising from the 7 percent increase will be apportioned proportionately between the concerned governments.
