The Central Government's Department of Pensions and Pensioners' Welfare issued an official order on May 22nd. This order provides significant relief. This is considered important news for senior retired employees and their families. The government has decided to increase the Dearness Relief (DR) for this group. This decision applies to retired employees and their eligible families who are still under the 5th Central Pay Commission. These new Dearness Relief rates will be effective from July 1, 2025, and January 1, 2026.

Who will benefit?

This revised Dearness Relief (DR) will only be available to a limited category of retired CPF beneficiaries and their eligible families. The first category includes surviving CPF beneficiaries who retired between November 18, 1960, and December 31, 1985, and who are currently receiving the original ex-gratia payment. For these individuals, the new DR rates will be as follows:

474% effective July 1, 2025
483% effective January 1, 2026
The second category includes widows and eligible dependent children of deceased CPF beneficiaries; and employees who retired before November 18, 1960, and are currently receiving ex-gratia payments. For this group, the new DR rates will be as follows:

466% applicable from July 1, 2025
475% applicable from January 1, 2026
Since these rates will be applicable retrospectively (from July 2025 and January 2025), the arrears of previous months will also be paid in full to the eligible beneficiary.

Points to keep in mind while calculating
The government has clarified that when calculating DR, if the answer to an amount is in fractional terms, i.e., in paise, then as per the rules, the amount will be rounded up to the next whole rupee. For example, if the amount after calculation is 200.15, it will be considered as 201. The government has further stated that, in all cases, it will be the responsibility of the pension disbursing institutions and public sector banks to ensure that the DR calculation is correct.

It's important to note that this increase in DR applies only to a select group of senior citizens who are receiving ex-gratia amounts under the old CPF scheme. On the other hand, for regular central government employees and pensioners covered under the 7th Pay Commission, their DA and DR are currently fixed at 60% (this rate will be applicable from January 1, 2026).

PC: Navarastra