Govt Issues Orders on Notional Increment for Retiring Employees

In response to Rajya Sabha question, Centre confirms orders issued for pension-related increment

In a significant update for Central Government employees, the Union Government has clarified that orders have indeed been issued for granting notional increment to those employees who retired either on 30th June or 31st December, right before their annual increment date. This move has been a longstanding demand by retirees seeking justice in pension calculations.

The clarification came in response to Unstarred Question No. 3798, posed by Shri Nagendra Ray in the Rajya Sabha on 3rd April 2025.

What Is the Notional Increment Issue All About?

Central Government employees generally receive their annual increment on 1st July or 1st January. However, employees retiring just a day before—on 30th June or 31st December—miss out on this increment, despite having served the full year. The absence of this increment significantly affects their pensionary benefits, including monthly pension and retirement gratuity.

Over the years, several court cases have ruled in favor of such retirees, with the Hon’ble Supreme Court delivering an interim order on 6th September 2024 in M.A. Dy. No. 2400/2024, prompting government action.

Government Order Issued Following Supreme Court Direction

In response to the Supreme Court’s interim order, the Department of Personnel and Training (DoPT) issued detailed instructions via Office Memorandum No. 19/116/2024-Pers.Pol. (Pay)(Pt) dated 14th October 2024. This was done after due consultations with the Department of Legal Affairs and the Department of Expenditure, the reply confirmed.

Implementation Timeline and Eligibility Explained

The government’s reply clarified the scope and limits of this order as follows:

Effective Date: Pension revisions including the notional increment are applicable from 1st May 2023 onwards.
No Arrears for Earlier Period: No enhanced pension will be paid for any period prior to 30th April 2023.
Litigants Get Earlier Benefit: If a retired employee had filed a writ petition or application for impleadment and received a favorable court order, the enhanced pension including one additional increment will be paid from the month of filing the application.

Who Stands to Benefit?

Covered:

Retirees who superannuated on 30th June or 31st December and hence missed the 1st July or 1st January increment respectively.
Those who filed legal applications before May 2023 and received favorable orders.