The federal government has announced a 7 percent increase in pensions for all federal government pensioners. The revised pension will take effect from July 1, 2026. The increase covers retired civilian employees, armed forces personnel, civil armed forces personnel, and family pensioners.
The Finance Division issued the notification through an Office Memorandum. It said the government will calculate the latest increase using the baseline pension instead of the gross or net pension. This method follows the revised pension policy introduced last year.
The increase applies to all federal civil pensioners, including civilians paid from defence estimates. It also covers retired members of the armed forces and civil armed forces. In addition, employees who retire on or after July 1, 2026, will also qualify for the revised pension.
According to the Finance Division, the baseline pension will be calculated under notifications issued in January, July, and August 2025. Those changes introduced a new pension formula to make future annual increases more consistent. As a result, yearly pension increases now apply to the baseline pension instead of the enhanced pension amount.
The notification also confirms that pensioners retiring on or after July 1, 2026, will continue to receive the 15 percent pension increase granted in 2022. They will also remain eligible for the 7 percent increase announced in 2025. The latest 7 percent increase will apply wherever it is allowed under the baseline pension framework.
Furthermore, the revised pension will apply to family pensions granted under the Pension-cum-Gratuity Scheme, 1954, the Liberalized Pension Rules, 1977, the Central Civil Services (Extraordinary Pension) Rules, and compassionate allowance under CSR-353. This means widows and other eligible family members will also receive the updated pension payments.
The Finance Division also explained how shared pension payments will work. If the federal government shares pension liability with another government under the Accounts Code, both governments will divide the additional cost of the 7 percent increase according to the existing rules.
However, the government has kept some exclusions unchanged. The latest increase will not apply to the Special Additional Pension granted instead of the pre-retirement orderly allowance. It will also not cover the monetized value of a driver or orderly. These benefits will remain outside the annual pension increase, as they have in previous years.
