The Department of Pension and Pensioners’ Welfare has released an important clarification about gratuity for employees under the National Pension System (NPS).
The Office Memorandum (OM) explains when limits on gratuity apply and when employees can receive full benefits without reduction.
When Gratuity Limits Apply
The OM refers to Rule 4A of the CCS (Payment of Gratuity under NPS) Amendment Rules, 2025.
According to this rule:
If a government employee has worked in both central government service and a PSU or autonomous body, and receives separate gratuity from both, a limit will apply to the total gratuity.
If an employee is re-employed after retirement or receiving gratuity, they will not get a separate gratuity for the re-employment period.
In other words, employees who retire and then return to government service cannot claim a new gratuity for the additional service.
Special Cases: PSU and State Government Employees
The OM also clarifies situations for employees moving between organizations:
If an employee moves from a PSU or autonomous body to central government service, they will get gratuity for both periods.
However, the combined gratuity cannot exceed the maximum payable based on total service and the final salary at retirement.
Similarly, employees who worked in a state government and then joined central government service will also have the total gratuity capped at the amount they would have received if they had worked continuously in the central government.
Key Relief for Military Personnel
One of the most important clarifications concerns employees who served in the military before joining civil service.
If a person has already received gratuity for military service, their civil service gratuity will not be reduced because of the military gratuity.
This means military personnel moving to civil service under NPS rules will get full gratuity for their civil service period without any deductions.
What This Means for Employees
This OM brings clarity and relief for many employees:
Those joining the government from PSUs or autonomous bodies now understand how limits apply.
Former military personnel benefit from full civil service gratuity.
Overall, the rules are now simpler and easier to understand, helping both employees and pensioners plan their retirement benefits better.
