7th Pay Commission: Big News For Govt Employees And Pensioners, DA Hike Approval To Boost PF & Gratuity

Finally, there is good news for the lakhs of central government employees and pensioners who had been waiting for a hike in dearness allowance (DA) and the dearness relief (DR). As per sources, the Central government employees will get a revised salary from July 1. Owing to the pandemic, the Centre had withheld DA and DR of employees and pensioners, but they will finally avail the benefits, as the government has announced that the stalled DA and DR would be released from July 1.

It is believed that the decision to restore DA and DR would benefit about 50 lakh central government employees and more than 65 lakh pensioners. Take a look at the benefits the central government employees and pensioners would avail from next month. At present all the central government employees and pensioners are getting 17% DA which is likely to jump to 28% including the 3% DA hike effective from 1st January 2020, and the 4% DA hike effective from 1st July 2020, and an expected 4% DA hike from 1st January 2021. The hike would ensure that there is a significant jump in the take-home pay of the central government employees. Similarly, the pension amount will also increase from July 1.

But will they get the arrears?

Recently, citing the Covid-19 crisis, the Finance Ministry said that the additional installment of Dearness Allowance payable to Central Government employees and Dearness Relief to Central Government pensioners, due from 1st January 2020 shall not be paid. The additional installments of Dearness Allowance and Dearness Relief due from 1st July 2020 and 1st January 2021 shall also not be paid. However, Dearness Allowance and Dearness Relief at current rates will continue to be paid. The Finance Ministry however clarified that the rates of Dearness Allowance and Dearness Relief as effective from 1st January 2020, 1st July 2020 and 1st January 2021 will be restored prospectively and will be subsumed in the cumulative revised rate effective from 1st July 2021. However, no arrears shall be paid for the period from 1st January 2020 till 30th June 2021.

DA Hike will give a push to PF and gratuity!

The PF contribution is calculated as a percentage of basic pay and DA, which means an increase in DA will also increase the monthly PF contribution of the CG employees. The DA hike will also boost the gratuity and the retirement corpus of CG employees.