Dearness Relief hiked to 50%: Who is eligible, how to calculate pension amount?

Dearness relief (DR), the component of pension that is aimed at offsetting the impact of inflation, was recently hiked by 4% for central government pensioners. This is similar to the dearness allowance, which is paid to central government employees. Here’s a look at who is eligible to receive the hike, and how the revised pension amount is calculated.

The DR was raised from 46% to 50% of the basic pension by the Department of Pension & Pensioners’ Welfare (DoPPW) via a notification issued on March 13, three days before the release of Lok Sabha election dates that led to the imposition of Model Code of Conduct.

The DR has been hiked retrospectively, effective from January 1, 2024. This means that the pensioners will be paid arrears for the last two months. The revision in DR is in accordance with the provisions of the 7th Pay Commission.

Also Read: Cabinet approves 4% DA increase for central government employees

Which categories of pensioners are eligible for the DR hike?

• Civilian central government pensioners, family pensioners, including central government absorbee pensioners in public sector undertakings and autonomous bodies, for whom orders have been issued “for the restoration of full pension after the 15-year commutation period has expired” will be eligible for the revised DR, the DoPPW said in the office memorandum issued on March 13.

• The hike will also be applicable for “armed forces pensioners or family pensioners and civilian pensioners or family pensioners (who) are paid from the Defence Service Estimates”, the memorandum added.

Besides the above, all-India service pensioners and family pensioners, railway pensioners, and pensioners on a provisional pension are also eligible, the DoPPW further noted.

How to calculate the revised pension amount?

Before the latest revision, DR stood at 46% of the basic pension in the overall pension paid to a retired employee. For instance, if the basic pension was ₹40,000, then the dearness relief component stood at ₹18,400. This took the gross pension amount (basic pay + DR) to ₹58,400.

With DR now hiked to 50% of the basic pension, the calculation will change as follows: If the basic pension is ₹40,000, then the DR component will come in at ₹20,000. This will increase the gross pension amount to ₹60,000. This is higher by ₹1,600, as compared to the first example in which the gross pension amount was calculated using 46% as the DR rate.