Great News for Central Government Employees! DoPT Makes Changes in Increment Rules, Check

Central Govt  Employees: There are many central government employees who retired or going to retire a day before the official annual pay hike. As per Department of Personnel and Training (DoPT), these government employees will get a notional hike in their income which will be used for the calculation of their pensions.

What is New Notional Increment Rule for Central Govt  Employees?

•    As per Supreme Court order, central government employees who retired or going to retire a day before their annual pay hike will now be eligible for a notional increment which will be the base to calculate their pension. 
•    This decision, effective from May 1, 2023, ensures that central government employees who retired or going to retire on June 30 or December 31, having fulfilled service requirements, will receive the notional increment merely for the calculation of pension.

Causes of New Notional Increment Rule for Central Govt  Employees?

•    Madras High Court, in an order dated September 15, 2017, allowed the grant of notional hike to a petitioner on the day following the date of his retirement from service for calculation of pension. This order was fulfilled by DoPT. 
•    Later, the DoPT received many submissions from the employees who retired on June 30/December 31, claiming parallel benefits. Many court cases were also filed before Administrative Tribunals, High Courts, and the Supreme Court on the issue.
•    In one similar case in 2023, the Supreme Court permitted the grant of one annual increment, which the petitioners earned on the last day of their service for rendering services during the preceding one year from the date of retirement with satisfactory work and behavior, for the calculation of retirement benefits.
•    Later, in 2024, the Supreme Court gave effect to this for all similar cases subject to fulfillment of certain conditions.
•    The DoPT has ultimately decided to grant the notional increment for the calculation of pension benefits. “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," ," the DoPT said in an Office Memorandum dated May 20, 2025.
Further it was said that "As specifically mentioned in the orders of the Hon'ble Supreme Court, grant of the notional increment on 1st 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," 

Central government employees, who retired or going to retire one day before the annual pay hike which happens on January 1 and July 1, will get the notional increment for the benefit of future pensions.