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7th CPC Pension Calculation – Pension Calculation Formula for Central Govt Employees

7th CPC Pension Calculation

Table of Contents

  • Revision of Pension as per 7th CPC for Pre-2016 Pensioners: Orders issued on the report of Pension Committee
  • The DoPPW issued orders on 12.5.2017 regarding the revision of pension for Pre-2016 pensioners

Revision of Pension as per 7th CPC for Pre-2016 Pensioners: Orders issued on the report of Pension Committee

The DoPPW issued orders on 12.5.2017 regarding the revision of pension for Pre-2016 pensioners

“The feasibility of the first option recommended by 7th CPC has been examined by a Committee headed by Secretary, Department of Pension Pensioners’ Welfare.

The aforesaid Committee has submitted its Report and the recommendations made by the Committee have been considered by the Government.

Accordingly, it has been decided that the revised pension/family pension w.e.f 01.01.2016 in respect of all Central civil pensioners/family pensioners, including CAPF’s, who retired/died prior to 01.01.2016, may be revised by notionally fixing their pay in the pay matrix recommended by the 7th CPC in the level corresponding to the pay in the pay scale/pay band and grade pay at which they retired/died.”

READ ALSO: Revision of Pension as per 7th CPC for Pre-2016 Pensioners: Orders issued on the report of Pension Committee

The 7th Pay Commission has recommended the fixation of pension for civil employees including CAPF personnel, who have retired before 01.01.2016, given two formulations with illustrations for fixing of pension. One for the pensioners retired before 2016 and another one is for the pensioners retired before 2006.

And also recommended, the first formulation of fixing the pension may take a little time since the records of each pensioner will have to be checked to ascertain the number of increments earned in the retiring level. The first instance the revised pension may be calculated as in the second formulation and the same may be paid as an interim measure. In the event calculation as per the formulation of fixing the pension yields a higher amount the difference may be paid subsequently.

And one more important recommendation of option given to the pensioners for choosing whichever is beneficial to them.

Recommendations on fixing of Pension by 7th CPC : All the civilian personnel including CAPF who retired prior to 01.01.2016 (expected date of implementation of the Seventh CPC recommendations) shall first be fixed in the Pay Matrix being recommended by this Commission, on the basis of the Pay Band and Grade Pay at which they retired, at the minimum of the corresponding level in the matrix.

1.This amount shall be raised, to arrive at the notional pay of the retiree, by adding the number of increments he/she had earned in that level while in service, at the rate of three percent. Fifty percent of the total amount so arrived at shall be the revised pension.

2. The second calculation to be carried out is as follows. The pension, as had been fixed at the time of implementation of the VI CPC recommendations, shall be multiplied by 2.57 to arrive at an alternate value for the revised pension.

READ ALSO: 7th CPC Pension Calculation as per Gazette Notification on 12 May 2017 with Illustrations

Case I : Pensioner ‘A’ retired at last pay drawn of Rs. 79,000 on 30 May, 2015 under the VI CPC regime, having drawn three increments in the scale Rs. 67,000 to 79,000:

S.No. Description Amount in Rs.
1. Basic Pension fixed in VI CPC 39,500
2. Initial Pension fixed under Seventh CPC (using a multiple of 2.57) 1,01,515-Option 1
3. Minimum of the corresponding pay level in 7 CPC 1,82,200
4. Notional Pay fixation based on 3 increments 1,99,100
5. 50 percent of the notional pay so arrived 99,550-Option 2
6. Pension amount admissible (higher of Option 1 and 2) 1,01,515

Case II : Pensioner ‘B’ retired at last pay drawn of Rs. 4,000 on 31 January, 1989 under the IV CPC regime, having drawn 9 increments in the pay scale of Rs. 3000-100-3500-125-4500:

S.No. Description Amount in Rs.
1. Basic Pension fixed in IV CPC 1,940
2. Basic Pension as revised in VI CPC 12,543
3. Initial Pension fixed under Seventh CPC (using a multiple of 2.57) 32,236 Option 1
4. Minimum of the corresponding pay level in 7 CPC 67,700
5. Notional Pay fixation based on 9 increments 88,400
6. 50 percent of the notional pay so arrived 44,200 Option 2
7. Pension amount admissible (higher of Option 1 and 2) 44,200

Minimum Pension

The concept of minimum pension and the method of computing it have not been explained by any of the pay commissions or the Government, it is clear that the Minimum Pension is 50% of the Minimum Wage.

The rationale behind the percentage has nowhere been explained. We however think that in order to ensure that it is adequate, 100% of the minimum wage should be the Minimum Pension.

The very concept of Need Based Minimum Wage is that this is a level of wage below which a worker’s family cannot subsist / survive and remain capable to perform.

That being the concept of minimum wage, it should also apply in the case of Minimum Pension on the premise that any pension lower than the Minimum pay is insufficient to enable a pensioner / family pensioner to live or survive.

First & Second Option issue

After a long deliberation of all pensioners associations, the Government has decided to constitute a high-power committee to examine the feasibility of implementation of first option for pre-2016 pensioners.

The Cabinet Committee decided on the recommendations of high power committee, the revised pension/family pension w.e.f 01.01.2016 in respect of all Central civil pensioners/family pensioners, including CAPF’s, who retired/died prior to 01.01.2016, may be revised by notionally fixing their pay in the pay matrix recommended by the 7th CPC in the level corresponding to the pay in the pay scale/pay band and grade pay at which they retired/died.

So, as per the decision of Government of India, the first formulation of pesnion revision is implemented to all civil pre-2016 pensioners.

Few illustrations are given below to understand the first and second option calculation who retired in 4th CPC, 5th CPC and 6th CPC…

Retired in 4th CPC regime (Retired on 31.12.1984)
1. Date of Retirement 31.12.1984
2. Pay Scale at the time of retirement 975 – 1660 (4th CPC Scale)
3. Basic Pay on retirement 1210
4. Pension as on 1.1.2016 before revision 4191
5. Revised pension by multiplying pre-revised pension by 2.57 10,771
6. Pay fixed on notional basis on 1.1.1996 3,710 (3200-4900)
7. Pay fixed on notional basis on 1.1.2006 8,910 (PB-1, GP 2000)
8. Pay fixed on notional basis on 1.1.2016 23,100 (Level-3)
9. Revised pension w.e.f. 1.1.2016 as per first formulation 11,550
10. Revised pension payable (Higher of S.No.5 and 9) 11,550
Retired in 4th CPC regime (Retired on 31.01.1989)
1. Date of Retirement 31.01.1989
2. Pay Scale at the time of retirement 3000 – 4550 (4th CPC Scale)
3. Basic Pay on retirement 4,000
4. Pension as on 1.1.2016 before revision 12,600
5. Revised pension by multiplying pre-revised pension by 2.57 32,382
6. Pay fixed on notional basis on 1.1.1996 11,300 (10,000-15,200)
7. Pay fixed on notional basis on 1.1.2006 27,620 (PB-3, GP 6600)
8. Pay fixed on notional basis on 1.1.2016 71,800 (Level-11)
9. Revised pension w.e.f. 1.1.2016 as per first formulation 35,900
10. Revised pension payable (Higher of S.No.5 and 9) 35,900
Retired in 5th CPC regime (Retired on 30.06.1999)
1. Date of Retirement 30.06.1999
2. Pay Scale at the time of retirement 4000-6000 (5th CPC Scale)
3. Basic Pay on retirement 4,800
4. Pension as on 01.01.2016 before revision 5,424
5. Revised pension by multiplying pre-revised pension by 2.57 13,940
6. Pay fixed on notional basis on 1.1.2006 11,330 (PB-1, GP-2400)
7. Pay fixed on notional basis on 1.1.2016 29,600 (Level-4)
8. Revised pension w.e.f. 1.1.2016 as per first formulation 14800
9. Revised Pension w.e.f. 1.1.2016 (Higher of 5 & 8) 14800
Retired in 6th CPC regime (Retired on 31.05.2015)
1. Date of Retirement 31.05.2015
2. Pay Scale at the time of retirement 67000-79000 (6th CPC Scale)
3. Basic Pay on retirement 79,000
4. Pension as on 1.1.2016 before revision 39,500
5. Revised pension by multiplying pre-revised pension by 2.57 1,01,515
6. Pay fixed on notional basis on 1.1.2016 2,05,100 (Level- 15)
7. Revised pension w.e.f. 1.1.2016 as per first formulation 1,02,550
8. Revised pension payable (Higher of S.No.5 and 7) 1,02,550

7th Pay Commission Pension Calculation
(Fixation for Pre-2016 Pensioners)

The motive of constitution of Pay Commission is not only for existing employees, also for retired employees (Pensioners), including Railway and Defence Pensioners. Revision of Pension and Retirement Benefits are very important aspects in the report of Pay Commission.

Old Pension Scheme and National Pension System

OPS and NPS: There is a main difference between the employees, appointed on and after 1.1.2004 are covered by the National Pension System (NPS). And all others (appointed on or before 31.3.2003) are covered by the Old Pension Scheme.

The pension and family pension calculation methodology recommended in 7th pay commission for the pensioners who are retired under Old Pension Scheme.

Calculation Methodology as per 7th CPC

The 7th Central Pay Commission has recommended two options for calculating revised pension for Civil Pensioners who retired before 1.1.2016.

First option is the revised pension will be fixed in the Pay Matrix on the basis of 6th CPC pay. To arrive notional pay, the amount of minimum of his corresponding level and adding the number of increments earned in service. And then pension and family pension will be calculated.

The second option is basic pension (Fixed at the time of 6th CPC) multiply with 2.57 fitment factor to arrive at an alternative value for the revised pension.

One of the biggest and familiar federation which is established in 1955, Bharat Pensiners Samaj (BPS) submitted a memorandum to 7th Pay Commission related to pensioners issue.

Pension Entitlement – Emoluments for Pension

3.1 The entire income in form of basic pay, special pay or personal pay if any, deputation duty allowance etc are the elements of pay proper and therefore confining the emoluments to the basic pay as recommended by the IV and V CPCs is arbitrary an thereof should be undone. The Dearness Allowance is meant to restore the purchasing power of pay and therefore is only an addition to pay. In many countries there is no system of DA. Periodically the Pay is revised / indexed taking into account the rise in cost of living. Here also there is a system of merging the DA as DP for purposes of pensioner benefits. In respect of gratuity already the DA is being included with Pay and therefore there is no reason for excluding the DA from the emoluments. We therefore suggest that the emoluments for the calculation of pension should include:

(a) Basic Pay
(b) Any Special pay or personal pay, or deputation duty allowance.
(c) Dearness Allowance
(d) Non-practising allowance in respect of Doctors
(e) 75% of the running allowance in respect of Railway Running Staff retired after 4.12.1988.

3.2 There are persons who retire after having served for full year since their last increment. The next increment which has already accured to them is however not added to their amoluments for purposes of computing pension and other pensionery benefits. It is therefore submitted that the Commission may kindly consider and recommend that if a person retire on the day he has completed 12 months of service since his last increment, the increment accrued to him may be added notionally to his basic pay and then the pension computed.

3.3 The VI CPC has already recommended that the ten monthly average emoluments or the last pay drawn, whichever is more beneficial, should be the basis of computation of pension. We have therefore no further suggestion to place before the Commission on this issue.


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