New Delhi. Relief news has emerged for lakhs of retired employees of Indian Railways. Railway Board has issued instructions to expedite the process of giving the benefit of ‘Notional Increment’ (notional annual salary increase) to such employees who retired on June 30. After this decision, there will be an increase in the pension of eligible pensioners and they will also be able to get the benefit of arrears.
Railway Board issued important new instructions on July 16
The Railway Board has issued new instructions to all zonal railways and production units on July 16, 2026 to implement this system soon. Even before this, an order in this regard was issued on 20 February 2026, but in many zones the process could not proceed at the expected pace. Now the Board has clearly said that all the pending cases of eligible employees should be resolved soon so that they can get the benefits of their rights without any delay.
Did those retiring on June 30 suffer losses?
The annual increment of employees in Railways comes into effect on 1st July every year. In such a situation, the employees who retired on June 30 were deprived of this increment because they were out of job only a day earlier. This had a direct impact on their final salary calculation, which also reduced pension and other retirement benefits. For a long time, employee organizations were demanding to remove this discrepancy.
Way found after Supreme Court’s decision
After a legal battle over this issue, the Supreme Court ruled in favor of the eligible employees. After this, as per the guidelines of the Department of Personnel and Training (DoPT) of the Central Government, the Railway Board decided to give ‘Notional Increment’. Under this system, even if the employee has retired on June 30, while calculating the pension, he will be given the benefit by adding the annual increment of July 1.
Monthly pension will now increase with this decision
After receiving the notional increment, the monthly pension of the eligible employees will increase. It may also have a positive impact on the calculation of gratuity and other retirement benefits, where applicable. This decision has brought relief especially to those pensioners who were waiting for this benefit for years.
Arrears will be received after revised PPO
Railway administration will first prepare the list of eligible employees. After this their Pension Payment Order (PPO) will be amended. After the release of the revised PPO, the increased pension will be applicable and the outstanding amount will also be paid into the bank accounts of the concerned employees in a phased manner.
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