The government has no plans to set up the eighth Pay Commission for some 5.4 million central government employees and pensioners ahead of the national election next year, Finance Secretary TV Somanathan has said.

"There is nothing in the offing regarding setting up the 8th Pay Commission. It's not due at present," Mr Somanathan said on Thursday.

In the past, in the run-up to elections, governments have used the establishing or implementation of the Pay Commission as an effective tool to win over central government employees, armed forces personnel and family pensioners. The 7th Pay Commission was set up by the Congress-led UPA government in September 2013, months before state and general elections.

The BJP, however, has steered clear of such a move, instead focusing on a review of a new pension scheme that has become a point of contention for new state and central government employees.

Under the current scheme, employees contribute 10 per cent of their basic salary, while the government pays 14%. It has become politically contentious, with several opposition-ruled states switching to the old pension scheme that guarantees pensioners 50 per cent of their last drawn salary monthly, without any employee contribution.

The government set up a committee led by the Finance Secretary to review the system.

"We have completed consultations with all concerned and our report should be submitted soon," Mr Somanathan said.

The government may bring about changes to ensure employees get at least 40 to 45 per cent of their last salary.