Notional increment on superannuation

Employees retiring on 30 June or 31 December get one notional increment for pension, after Supreme Court rulings and DoPT orders. Who qualifies and when.

Updated 8 September 2026

The notional increment on superannuation is one increment granted, on paper, to a central government employee who retires on 30 June or 31 December, a day before the annual increment on 1 July or 1 January would have fallen due. The increment is never drawn as salary; it is added notionally to the employee’s last pay so that the pension is worked out on the higher figure. It is the answer, after years of litigation, to a small but genuine unfairness: an employee who served a full year and would have earned an increment the next morning lost it entirely by retiring one day too soon, and carried that loss into the pension for life.

The benefit is now settled for central government employees, but it comes with sharp limits that are easy to get wrong. It counts only for the pension, not for the retirement gratuity or any other pensionary benefit; it is available to those who retired on 30 June or 31 December on or after 1 January 2006; and for an employee who did not go to court, the higher pension is payable only from 1 May 2023, with no arrears for the earlier period.

The one-day problem

The difficulty is created by the fixed increment dates. Under Rule 10 of the CCS (Revised Pay) Rules, 2016, the annual increment falls on one of two dates, 1 July or 1 January. An employee’s superannuation, by contrast, falls on the last day of the month in which they turn 60, so a very large number of employees retire on 30 June or 31 December, the day before their increment date.

Such an employee has served the whole preceding year, and but for the accident of the calendar would have drawn the increment the next day. Because pension is computed on the last pay, missing that final increment lowers the last pay used, and therefore lowers the pension for the rest of the pensioner’s life. The sum is small in any one month but permanent, and it affects a huge cohort of retirees, which is why the issue was litigated so persistently.

From the Madras High Court to the Supreme Court

The benefit was built by the courts, not the government, over several years.

Madras High Court, 2017. In P. Ayyamperumal v. Union of India (W.P. No. 15732 of 2017, order dated 15 September 2017), the Madras High Court granted a notional increment, for the purpose of pension, to an employee who retired the day before it fell due. The order was implemented only for the petitioner, in personam, but it opened the door, and the Department of Personnel and Training then received a flood of similar representations and cases before tribunals and High Courts.
Supreme Court, 2023. The question reached the Supreme Court in the Karnataka Power Transmission Corporation matter. In Civil Appeal No. 2471 of 2023, decided on 11 April 2023 (the C.P. Mundinamani case), the Court agreed with the Karnataka High Court that an employee who retired one day before the increment, having rendered the preceding year of service with good conduct and efficiency, was entitled to that one increment for pension. The Union of India was not a party to that case, which is why separate instructions were later needed for central government employees.
Reaffirmation. The Court applied the same view in later matters such as M. Siddaraj, settling the principle.

The Supreme Court’s final directions

Because the 2023 judgment produced a wave of fresh claims from employees who had never litigated, the Supreme Court clarified how far it reached. After an interim order in September 2024, the Court gave final directions by its order dated 20 February 2025, disposing of the Ministry of Railways’ application and other petitions. The directions drew a line by litigation status:

Those who did not litigate (third parties) get the benefit from the date of the judgment: the pension taking one increment into account is payable on and after 1 May 2023, and enhanced pension is not paid for any period before 30 April 2023.
Those who litigated and succeeded are governed by their own court orders, which operate as res judicata.

Crucially, the Court confirmed that the notional increment is to be reckoned only for calculating the pension admissible, and not for the calculation of other pensionary benefits. That single sentence is what limits the benefit to the monthly pension.

The central government orders

Because the Union was not a party to the KPTCL case, the Department of Personnel and Training issued its own instructions to extend the benefit to central government employees, in consultation with the Department of Expenditure and the Department of Legal Affairs:

DoPT OM No. 19/116/2024-Pers.Pol.(Pay) dated 14 October 2024, granting the notional increment on 1 July or 1 January to central government employees who retired a day before it became due, with the requisite qualifying service and good conduct, for calculating the pension.
DoPT OM No. 19/116/2024-Pers.Pol.(Pay)(Pt) dated 20 May 2025, issued in pursuance of the Supreme Court’s order of 20 February 2025, reproducing the final directions and advising that action may be taken to allow the increment. It issued with the concurrence of the Department of Expenditure vide Dy. No. 08-09/2019-E.IIIA(Vol.III)(4265134) dated 29 April 2025 and the Department of Legal Affairs vide Computer Dy. No. E-144903 dated 17 March 2025.

The part-file suffix on the second number is worth noticing: both orders bear the file number 19/116/2024-Pers.Pol.(Pay), and the May 2025 order describes the earlier one as “this Department’s OM of even number dated 14.10.2024”.

The first order was itself provisional. Paragraph 1 of the May 2025 order records that the instructions of 14 October 2024 were issued in compliance with the interim order dated 6 September 2024 passed by the Supreme Court while hearing MA No. 2400/2024 filed by the Ministry of Railways with tagged intervention applications, and that the action taken was expressly subject to the outcome of the review petition (Dy. No. 36418/2024) the Department had filed against the judgment of 11 April 2023. Paragraph 2 records the end of that attempt: the Supreme Court dismissed the review petition by its order dated 18 December 2024, observing that there was no error apparent on the face of the record warranting reconsideration.

Individual departments, including the Department of Posts, the Department of Telecommunications, the Comptroller and Auditor General, the Department of Atomic Energy, and the Railways, have issued their own circulars adopting the DoPT orders.

Who is eligible

To qualify, an employee must meet all of the following:

have retired on superannuation on 30 June or 31 December, not on any other date and not on voluntary retirement, resignation, or removal;
have rendered the requisite qualifying service as on the date of superannuation; and
have a record of satisfactory work and good conduct.

Those three are the whole of the test, and they are the words paragraph 6 of the Office Memorandum of 20 May 2025 uses. There is no separate cut-off date of retirement written into either order: a retiree from 2010 and one from 2024 are equally eligible on these conditions. What differs between them is not eligibility but the period for which arrears are paid, which turns on litigation history and is dealt with below. Conflating the two is the commonest source of confusion about the benefit.

An employee who meets the three conditions is entitled to have one notional increment, the one that would have fallen on the 1 July or 1 January immediately after retirement, added to the last pay for the pension calculation.

What it covers, and what it does not

This is the point most often misunderstood. The notional increment is reckoned only for the pension, the monthly amount. It is not counted for:

the retirement gratuity, which is based on the pay actually drawn on the last day;
the commutation of pension, whose lump sum follows the commuted portion of the pension as otherwise computed;
leave encashment and other terminal benefits based on last pay.

So the benefit raises the pensioner’s monthly income for life, but it does not enlarge the one-time lump sums paid at retirement. An employee estimating the gain should apply the increment to the pension alone.

From which date the higher pension is paid

The Supreme Court’s order of 20 February 2025, reproduced at paragraph 3 of the Office Memorandum of 20 May 2025, sorts retirees into four groups. Which one applies decides how far back the arrears run.

Situation	From when the enhanced pension is paid
Third parties, who did not litigate	On and after 1 May 2023; no enhanced pension for any period before 30 April 2023
Those who filed writ petitions and succeeded	As directed in their own judgment, which operates as res judicata
Those whose judgment has not attained finality, or where an appeal has been preferred or entertained	The res judicata rule does not apply
Those who filed an intervention, impleadment, writ petition or original application before the CAT, a High Court or the Supreme Court	Enhanced pension for the period of three years prior to the month in which the application was filed

Two riders complete the picture. Paragraph 4 of the Office Memorandum records that the Supreme Court decided that the three-year rule in direction (d) does not apply to a retired employee who filed after the judgment in Union of India v. M. Siddaraj; such a person falls back on the 1 May 2023 rule instead. And paragraph 5 records the Court’s clarification that where any excess payment has already been made, including arrears, the amount paid will not be recovered, with pending applications, including all intervention and impleadment applications, standing disposed of in terms of the order.

One detail in direction (a) is worth flagging so it does not look like an error here. The Office Memorandum reproduces the direction that enhanced pension for the period prior to 30 April 2023 will not be paid, and adds in parentheses that the date was “erroneously mentioned as 31.04.2023 in the Order”. April has thirty days, so the date in the Supreme Court’s order does not exist, and the Department recorded the correction on the face of its own instruction rather than reproducing an impossible date.

How it feeds into the pension

The mechanics are simple once the limit is clear. Take an employee retiring on 30 June with a last basic pay of Rs. 1,00,000, whose pension would ordinarily be 50% of the last pay, that is Rs. 50,000 a month.

The notional increment of 3% adds Rs. 3,000, lifting the notional last pay to Rs. 1,03,000.
The pension is recomputed as 50% of Rs. 1,03,000, that is Rs. 51,500 a month, a gain of Rs. 1,500 a month for life, plus dearness relief on the higher base.
The gratuity and commutation are unchanged, because they are based on the pay actually drawn, Rs. 1,00,000, not the notional figure.

The gain compounds over a long retirement and through every future dearness-relief revision, which is why the benefit was worth the years of litigation, modest as it looks in a single month.

How to claim it

For an employee retiring now, the pension-sanctioning authority applies the notional increment when the pension is fixed, so no separate claim is usually needed. A past retiree whose pension was fixed without it should approach the office that sanctioned the pension, or the pension disbursing bank, citing the DoPT Office Memorandum dated 20 May 2025, to have the pension revised from the applicable date. Given that the payable date and any arrears depend on litigation status and the date of retirement, it is worth confirming the entitlement against the current orders before relying on a figure.

In force today

An employee retiring on superannuation on 30 June or 31 December gets one notional increment, the one that would have fallen on the following 1 July or 1 January, added to the last pay for the pension calculation only. It follows the Supreme Court’s judgment of 11 April 2023 and final directions of 20 February 2025, implemented for central government employees by the DoPT Office Memoranda of 14 October 2024 and 20 May 2025. Eligibility needs the requisite qualifying service, good conduct, and retirement on or after 1 January 2006. It does not enhance the gratuity, commutation, or leave encashment, which stay on the pay actually drawn. For non-litigants the higher pension is payable from 1 May 2023, with no arrears before that. The 8th CPC will issue fresh pay rules on implementation, but the increment-date mechanics that create the issue are expected to continue.

Frequently Asked Questions (FAQs)

What is the notional increment on superannuation?

It is one increment granted, on paper, to a central government employee who retires on 30 June or 31 December, a day before the annual increment on 1 July or 1 January would have fallen due. The increment is not paid as salary; it is added notionally to the last pay so that the pension is calculated on the higher figure. It follows a long line of court cases and is now implemented for central government employees by DoPT orders.

Who is eligible for the notional increment?

A central government employee who retired on superannuation on 30 June or 31 December, having rendered the requisite qualifying service as on the date of retirement with satisfactory work and good conduct, and who retired on or after 1 January 2006. The benefit does not apply to someone who left service on another date or for another reason, because the point is the single day between retirement and the increment date.

Does the notional increment increase the gratuity too?

No. The Supreme Court and the DoPT orders are explicit that the notional increment is reckoned only for calculating the pension admissible, and not for the calculation of other pensionary benefits. So the monthly pension is computed on the higher pay, but the retirement gratuity, commutation, and leave encashment, which are based on the pay actually drawn, are not enhanced by it.

From which date is the higher pension paid?

For an employee who did not litigate, the pension including the notional increment is payable on and after 1 May 2023, following the Supreme Court’s directions; enhanced pension is not paid for any period before 30 April 2023. An employee who had already obtained a court order in their favour is governed by that order. The benefit itself is available to those who retired on 30 June or 31 December on or after 1 January 2006.

What did the Supreme Court decide about the notional increment?

In Civil Appeal No. 2471 of 2023, decided on 11 April 2023 in the KPTCL matter, the Supreme Court held that an employee who retired the day before the increment fell due, having served the preceding year with good conduct and efficiency, is entitled to that one increment for pension. By its order of 20 February 2025 the Court gave final directions on how the benefit applies to those who did not litigate, fixing 1 May 2023 as the date from which the higher pension is payable to them.

How do I claim the notional increment for my pension?

For those retiring now, the pension-sanctioning authority applies the notional increment when the pension is fixed. A past retiree whose pension was fixed without it should approach the office that sanctioned the pension, or the pension disbursing bank, quoting the DoPT Office Memorandum dated 20 May 2025, to have the pension revised. Because the payment date and arrears depend on litigation status, the exact entitlement should be checked against the current orders.

Is there a cut-off retirement date for the notional increment?

No. Paragraph 6 of Department of Personnel and Training Office Memorandum No. 19/116/2024-Pers.Pol.(Pay)(Pt) dated 20 May 2025 sets three conditions and no fourth: retirement a day before the increment became due, that is on 30 June or 31 December; the requisite qualifying service as on the date of superannuation; and satisfactory work and good conduct. What varies between an older and a more recent retiree is not eligibility but the period for which arrears are payable, which turns on litigation history.

How far back are arrears paid for someone who went to court?

Three years before the filing. Direction (d) of the Supreme Court’s order of 20 February 2025 provides that where a retired employee filed an application for intervention or impleadment, a writ petition or an original application before the Central Administrative Tribunal, a High Court or the Supreme Court, the enhanced pension including one increment is payable for the period of three years prior to the month in which that application was filed. Paragraph 4 of the Office Memorandum of 20 May 2025 adds that this does not apply to a person who filed after the judgment in Union of India v. M. Siddaraj, who falls under the 1 May 2023 rule instead.

Was the government's review petition against the judgment dismissed?

Yes. Paragraph 1 of the Office Memorandum of 20 May 2025 records that the instructions of 14 October 2024 were issued in compliance with the Supreme Court’s interim order dated 6 September 2024 in MA No. 2400/2024 filed by the Ministry of Railways, expressly subject to the outcome of the review petition (Dy. No. 36418/2024) the Department had filed against the judgment of 11 April 2023 in Civil Appeal No. 2471 of 2023. Paragraph 2 records that the Court dismissed the review petition on 18 December 2024, observing that there was no error apparent on the face of the record.

Will an excess payment already made be recovered?

No. Paragraph 5 of the Office Memorandum of 20 May 2025 records the Supreme Court’s clarification that in case any excess payment has already been made, including arrears, such amount paid will not be recovered, and that pending applications, including all intervention and impleadment applications, stand disposed of in terms of the order.

External references

References

Madras High Court, P. Ayyamperumal v. Union of India, W.P. No. 15732 of 2017, order dated 15 September 2017 (notional increment for pension to an employee retiring a day before the increment date, implemented in personam).
Supreme Court of India, Civil Appeal No. 2471 of 2023 decided on 11 April 2023 (the Karnataka Power Transmission Corporation / C.P. Mundinamani matter), holding an employee retiring the day before the increment entitled to one increment for pension, and the final directions by order dated 20 February 2025 (payment to non-litigants from 1 May 2023, no arrears before 30 April 2023, increment for pension only and not other pensionary benefits).
Department of Personnel and Training, Office Memorandum No. 19/116/2024-Pers.Pol.(Pay) dated 14 October 2024, granting the notional increment on 1 July or 1 January to central government employees retiring on 30 June or 31 December for calculating the pension.
Department of Personnel and Training, Office Memorandum dated 20 May 2025, issued pursuant to the Supreme Court’s order dated 20 February 2025, with clarifications in 2025 on eligibility (retirement on or after 1 January 2006) and effective dates.
Central Civil Services (Revised Pay) Rules, 2016, Rule 10 (the 1 July and 1 January increment dates that create the one-day gap for employees retiring on 30 June and 31 December).
Department of Personnel and Training Office Memorandum No. 19/116/2024-Pers.Pol.(Pay)(Pt) dated 20 May 2025, on the grant of notional increment on 1 July or 1 January to employees who retired from central government service on 30 June or 31 December for the purpose of calculating their pensionary benefits: paragraph 1 (the instructions of 14 October 2024 issued in compliance with the interim order dated 6 September 2024 in MA No. 2400/2024 and subject to the review petition, Dy. No. 36418/2024, against the order of 11 April 2023 in Civil Appeal No. 2471 of 2023), paragraph 2 (dismissal of the review petition on 18 December 2024), paragraph 3 (the four final directions of 20 February 2025, including the three year rule in direction (d) and the correction of the date erroneously mentioned as 31.04.2023), paragraph 4 (the M. Siddaraj carve-out), paragraph 5 (no recovery of excess payment already made), paragraph 6 (the three eligibility conditions and the restriction of the increment to the pension admissible and not to other pensionary benefits) and paragraph 7 (the concurrence of the Department of Expenditure vide Dy. No. 08-09/2019-E.IIIA(Vol.III)(4265134) dated 29 April 2025 and of the Department of Legal Affairs vide Computer Dy. No. E-144903 dated 17 March 2025).