Central Govt employees retiring a day before annual pay hike to get notional increment: DoPT

Central government employees retiring a day before the official annual pay hike will get a notional increment for the calculation of their pensionary benefits, according to the Department of Personnel and Training (DoPT).

The DoPT has decided to grant a notional increment on July 1/January 1 to employees who retired from Central Government service on June 30/December 31, respectively, for calculating their pension benefits.

As per Rule 10 of the Central Civil Services (Revise Pay) Rules, 2006, the date of annual increment was made uniform on July 1 every year with effect from January 1, 2006. Subsequently, through Rule 10 (1) of the Central Civil Services (Revise Pay) Rules, 2016, it was decided that there shall be two dates for the grant of increment, namely January 1 and July 1 of every year.

However, in an order dated September 15, 2017, the Madras High Court Order dated allowed the grant of notional increment to a petitioner on the day following the date of his retirement from service for calculation of pensionary benefits. This order was implemented by DoPT for the petitioner. However, the DoPT later received several representations from the employees who superannuated on June 30/December 31, claiming similar benefits.

A large number of court cases were also been filed before Administrative Tribunals, High Courts, and the Supreme Court on the matter.

In one such case in 2023, the Supreme Court allowed 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 good behaviour and efficiency, to calculate the retiral benefits. Subsequently, in 2024, the apex court gave effect to this for all related cases subject to certain conditions.

The DoPT has now finally decided to grant the notional increment for the calculation of pension benefits.

"The matter has been examined in consultation with D/o Expenditure and D/o Legal Affairs. It is advised that... action may be taken to allow the increment on 1stJuly / 1st January to the Central Government employees who retired/are retiring a day before it became due i.e. on 30th June / 31st December 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.

"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," it added.