In a major regulatory shift, the Indian government has amended pension rules to deny retirement benefits to public sector employees dismissed for misconduct—regardless of their prior clean service record in government roles. This move emphasizes accountability and ethical conduct in the public sector, even after absorption into Public Sector Undertakings (PSUs).
Rule 37 of Pension Rules Amended
The Department of Pension and Pensioners’ Welfare has revised Rule 37 of the Central Civil Services (Pension) Rules, 2021. Under the new regulation, if an employee who was once part of the central government and later absorbed into a PSU is removed or dismissed due to misconduct, they will forfeit pension and retirement benefits accrued from their earlier government tenure.
What Has Changed?
Previously: Employees dismissed from PSUs still retained pension from prior government service.
Now: Misconduct after PSU absorption leads to total pension disqualification—including benefits from prior government service.
This closes a long-standing loophole and ensures equal treatment of misconduct across government and PSU domains.
Implications for Employees
This rule has direct implications for:
- Former government employees now working in PSUs
- PSU staff with previous government service records
Even if misconduct occurs years later, the entire pension may be lost. This creates a need for continued ethical behavior and accountability throughout a career.
Fairness and Review Mechanism
To ensure procedural fairness, the rule includes a review clause. Any PSU decision to dismiss an employee will be reviewed by the administrative ministry. The same disciplinary rules applicable to government employees will be applied analogously.
Government’s Message Is Clear
This amendment sends a strong signal: public accountability does not end with a job switch. Employees must uphold ethical standards throughout their service—whether in central government or in PSUs. The rule aims to strengthen integrity and reinforce trust in public service systems.
