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A central government employee absorbed in a Public Sector Undertaking (PSU) will lose retirement benefit of being a government employee, if she/he is dismissed or removed for misconduct, the Department of Pension and Pensionary Welfare has said. This will also have impact on compassionate allowance.
“The dismissal or removal from service of the public sector undertaking of any employee after his absorption in such undertaking for any subsequent misconduct shall lead to forfeiture of the retirement benefits for the service rendered under the Government also and in the event of his dismissal or removal or retrenchment the decision of the undertaking shall be subject to review by the Ministry administratively concerned with the undertaking,” a notification by Department of Department of Pension and Pensionary Welfare making changes in the Central Civil Services (Pension) Rules, 2021 said.
It has been made effective from May 23, 2025. The changes will be effective for all the central government officers and employees and also from Indian Audit and Accounts Department.
This will substitute existing provision where it was said that the dismissal or removal from service of the public sector undertaking of any employee after his absorption in such undertaking for any subsequent misconduct “shall not amount to forfeiture of the retirement benefits for the service rendered under the Government” and in the event of his dismissal or removal or retrenchment the decisions of the undertaking shall be subject to review by the Ministry administratively concerned with the undertaking.
Further, it has been said that the change will also have impact on four other provisions which include pension and family pension subject to future good conduct (Rule 7), power to withhold or withdraw pension (Rule 8), compassionate allowance (Rule 41) and amount of pension (Rule 44).
It may be noted that a government servant, governed by old pension schemes and joining Central/State/Autonomous Body after January 1, 2004, will be eligible to continue in Old Pension Scheme, if such scheme exists in new organization, where such employee submits resignation to take up new appointment with proper permission. Meanwhile, the service rendered in PSUs before joining service under the Government is not counted for the purpose of pension in government.
Rule says a government servant appointed in a pensionable establishment on or before December 31, 2003 and retires from government service with a qualifying service of 10 years or more is eligible for pension.
Pension is calculated at 50 per cent of emoluments (last pay) or average emoluments (for last 10 months), whichever is more beneficial to the retiring government service. For employees joining on or after January 1, 2004, will be governed by the National Pension System (NPS)
According to rules, future good conduct is the implied condition for grant/continuance of pension. “The appointing authority may, by order in writing, withhold or withdraw a pension or a part, whether permanently or for a specified period, if the pensioner is convicted of a serious crime or is found guilty of grave misconduct,” they said.
It has also been said that a Government servant who is dismissed or removed from service shall forfeit his pension and gratuity.
However, if the case is deserving of special consideration, the authority may sanction a compassionate allowance not exceeding two – thirds of pension or gratuity or both which would have been admissible to him if he had retired on superannuation pension.
Published on May 25, 2025
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