NEW DELHI: In a major decision, the government on Thursday decided to set up the 8th Pay Commission to revise salaries of central government employees and allowances of pensioners.

The decision to set up the 8th Pay Commission was taken by Prime Minister Narendra Modi, I&B Minister Ashwini Vaishnaw said.

The term of the 7th Pay Commission will end in 2026.

"Prime Minister has approved 8th Central Pay Commission for central government employees," the minister said. The chairman and two members of the Commission will be appointed soon, he added.

There are over 49 lakh central government employees and nearly 65 lakh pensioners.

The minister further said the setting up of the new Pay Commission in 2025 will ensure that its recommendations are received well before the completion of the term of the seventh pay panel.

Vaishnaw said consultations will be held with central and state governments and other stakeholders.

Since 1947, the government constituted seven pay commissions. The pay commission has a key role in deciding salary structures, benefits and allowances for government employees. Most of the state-owned organisations follow the commission's recommendations.

The 7th Pay Commission was constituted in 2014 and its recommendations were implemented on January 1, 2016.