The Government of India has introduced significant changes to the pension rules concerning employees of Public Sector Undertakings (PSUs). According to the newly notified Central Civil Services (Pension) Amendment Rules, 2025, employees dismissed or removed for misconduct from PSUs will now forfeit their retirement benefits. This marks a notable shift from earlier provisions that allowed retention of pension despite dismissal.
What Are the New Changes?
The amendment clarifies that any PSU employee absorbed from government service and subsequently dismissed or removed for misconduct will lose retirement benefits earned under government service. This forfeiture applies to the entire pension entitlement accumulated before and during PSU service.
Previously, such dismissal or removal did not impact the retirement benefits of PSU employees, even if the dismissal occurred for misconduct after their absorption into the PSU. The new rules intend to impose stricter accountability on employees by linking conduct to pension benefits.
Review Mechanism by Administrative Ministry
While the PSU can decide on dismissal or removal, the new rules specify that such decisions will be subject to review by the administrative ministry overseeing the PSU. This introduces an added layer of scrutiny to ensure fair and justified action before finalizing forfeiture of benefits.
Impact on Pension and Compassionate Allowance
The new amendment also states that pension continuation or grant, family pension subject to future good conduct, and compassionate allowance provisions will apply to dismissed or retrenched employees. This means that pension benefits can still be granted if the employee maintains good conduct post-dismissal or retrenchment, offering some scope for leniency.
Who Does This Apply To?
The Central Civil Services (Pension) Rules, 2021, apply to government servants appointed before December 31, 2003, excluding certain categories such as railway employees, casual/daily wage workers, and officers of the IAS, IPS, and IFoS. The recent amendment impacts PSU employees absorbed from government service under these pension rules.
Conclusion
This amendment reflects the government’s effort to enforce stricter discipline among PSU employees by linking misconduct to tangible financial consequences. It emphasizes the importance of good conduct throughout employment and aims to promote accountability in the public sector workforce.
