How 3% DR hike will impact pension, family pension

While announcing a dearness relief (DR) hike on Wednesday (October 28, 2026), Union Minister Ashwini Vaishnaw said that the increased payout of 3 percentage points that took the DR to 63% will benefit as many as 68 lakh pensioners.

When we talk about central government pensioners benefiting from the increased DR rate, they can be regular and family pensioners getting their pensions under the Old Pension Scheme (OPS) and Unified Pensioner Scheme (UPS). It also includes pensioners who have commuted their pension under the OPS.

In this write-up, we will show what a 3 percentage point DR increase means for all such pensioners.

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Impact of 3% DR hike on regular pension under OPS and UPS

Under the OPS, the pension amount is 50% of the last basic pay or the average emoluments of the last 10 months, whichever is higher. The minimum pension under the OPS is Rs 9,000, and the highest is Rs 1,25,000.

Under the UPS, the pension amount is 50% of the last 12-month average basic pay immediately before superannuation for 25 years of qualifying service. The pension amount is proportionate if the service is less than 25 years. The UPS offers a minimum assured pension of Rs 10,000 on completion of 10 years.

Both OPS and UPS pensioners receive DR on their basic pension. Have a look at how their basic pensions of Rs 10,000-Rs 50,000 will be impacted after a 3 percentage point DR increase.

Impact of 3% DR hike on family pension under OPS and UPS

Under the OPS, the family of a deceased employee is eligible for family pension when the employee dies after completion of one year of continuous service.

The amount of family pension is 30% of last-drawn pay, subject to a minimum of Rs 9,000 and a maximum of Rs 75,000 per month.

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It means if an eligible employee was getting a basic pay of Rs 80,000 at the time of death, the family pension will be approximately Rs 24,000.

Under the UPS, family pension is 60% of the employee’s admissible UPS payout.

If an employee’s basic pay at the time of death was Rs 80,000 and they had completed 25 years of service, the admissible pension payout would be approximately Rs 40,000. The family pension in that case will be 60% of Rs 40,000=Rs 24,000.

Impact of 3% DR hike on family pension (OPS)

Impact of 3% DR hike on family pension (UPS)

Impact of 3% DR hike on commuted pension (OPS)

Under the OPS, a central government employee can commute up to 40% of their pension. After that, their monthly pension is reduced by the portion commuted.

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Dearness relief, however, is continuing to be calculated based on the original pension (i.e. without reduction of the commuted portion).

It means that if the regular pension was Rs 50,000, and after a 40% commutation, it will be reduced to Rs 30,000. However, the pensioner will get the DR on the Rs 50,000 basic pension, and not on the reduced amount.

These are illustrations, and the real increase in these respective pensions may differ slightly.