DA, DR hike: Dearness allowance for pensioners — Dearness Relief calculation, eligibility, explained
Pensioners in India include the retired government employees who are eligible for individual or family pension from the government after their tenure. In continuance from their salaries, pensioners receive a dedicated percentage of their pension payout which is aimed at mitigating inflation. However, this component, known as Dearness Allowance (DA) in salary, is called Dearness Relief (DR) in pension.
DR is often paid to retired central and state government employees, railways and defence personnel, public sector staff, and bank employees across the country. The beneficiaries include close to 65 lakh pensioners across various pay scales.
Notably, in India, DA and DR are only provided by the central government for its employees and retirees. The private sector does not offer the same for employees or pensioners in the country. Here’s all you need to know, explained:
Are DA and DR calculations similar?
As a component of the monthly salary, DA is revised biannually based on the 12-month average of the All-India Consumer Price Index (AICPI), with announcements in early March and October, followed by rollouts in January and July. Notably, each time DA is adjusted or revised by the pay commission, a similar change is reflected in DR, accordingly.
DR impacts the in-hand pension payout for retired central government staff who receive individual or family pension from the government. Under the 7th CPC, there have been 10 hikes since 2021, with the highest at 11% in July 2021. The past two hikes were 2% and 3%, respectively, for January and July 2025.
Eligibility: Can pensioners lose DA or DR?
According to a report by Clear Tax, pensioners cannot get DA when re-employed, and DA is granted on a time scale or fixed pay. Further, DA is not paid to pensioners when they reside in a foreign country during re-employment. But pensioners residing abroad without being re-employed are eligible to get DA on their pension.
8th CPC: Key pension related demands
The National Council — Joint Consultative Machinery (NC-JCM), Maharashtra Old Pension Organisation and All India Defence Employees Federation (AIDEF) have made detailed submissions to the commission. Overall, they have demanded comprehensive pension restructuring, improvements and parity in payments:
| Employee Group | Pension Reform |
|---|---|
| NC-JCM | Structural alignment with revised pay |
| Maharashtra Old Pension Organisation | OPS restoration + UPS reforms + DA linkage |
| AIDEF | Pension parity with revised pay structure |
Demands made by other employee groups and stakeholders include:
- Increase minimum pension to 67% of the Last Pay Drawn (LPD) or the average emoluments drawn during the last 10 months of service.
- Revision of the fitment factor used for pension calculations.
- Review of the DR structure and its integration into pension benefits.
- Expansion of the scope of family pension benefits.
- Increasing the gratuity ceiling and revising pension commutation rules.
- Option to choose between different pension systems — Old Pension Scheme (OPS), National Pension System (NPS) or the Unified Pension Scheme (UPS) — based on a retirees’ preferences and needs.
- Introducing progressive age-based pension enhancement up to 100% of the LPD for pensioners aged 90 years and above. Check below table:
| Age of Pensioner | Proposed Pension Level |
|---|---|
| 65 years | 70% of Last Pay Drawn |
| 70 years | 75% of Last Pay Drawn |
| 75 years | 80% of Last Pay Drawn |
| 80 years | 85% of Last Pay Drawn |
| 85 years | 90% of Last Pay Drawn |
| 90 years and above | 100% of Last Pay Drawn |
DA, DR announcements this year
The Finance Ministry in April announced revision in DA and DR by 2%, up from 58% to 60% of Basic Pay, with effect from 1 January 2026. In May, the Indian Banks’ Association (IBA) also announced revised DA and DR for workmen and officer employees across levels for the months of May, June and July 2026. It hiked basic salaries between ₹48,000 to ₹1,17,000 and DA from ₹435 to ₹1,050. This was followed by a 2% DA and DR hike announced by the Indian Railways on 13 May.
Various state governments also increased salaries in order to close gaps in payment with the central government. Notably, since DA is connected to cost-of-living, the amount for state government employees differs depending on their work location and can vary depending on the area being urban, rural or semi-urban.
The latest being West Bengal, which hiked DA by 20% last month with effect from October taking the component to 38% of basic salary. Prior to this, Arunachal Pradesh, Assam, Odisha, Tamil Nadu and Uttar Pradesh each approved 2% hikes, while Bihar implemented 2% hike for staff under the 7th pay commission, 5% hike for employees under 6th CPC and 9% for staff under 5th CPC.
Further, Maharashtra greenlit payment of ₹800 crore DA arrears under the 5th, 6th and 7th CPCs for November and December 2025, and January 2026; and 2% DR hike for retired All India Services officers.
