The central government has made a major change in pension rules. Now, employees removed from service in Public Sector Undertakings (PSUs) due to disciplinary action can lose all their retirement benefits, including pension.
This rule change took effect on May 22, 2025, under the Central Civil Services (Pension) Amendment Rules, 2025.
What Was the Old Rule?
Earlier, if a government employee joined a PSU permanently from central government service and was later dismissed from the PSU, their pension earned during government service remained safe.
But now, if PSU employees are dismissed for misconduct or indiscipline, they can lose the pension and retirement benefits earned from their earlier government job.
Review Process Before Final Decision
A review will be done by the concerned administrative ministry before making a final decision on pension denial.
This ensures every dismissal case is handled carefully and fairly based on facts.
Pension May Still Be Granted in Some Cases
The new rules allow pension to be restored or family pension given in certain situations, like if the employee shows good behavior later.
Also, the government can offer Compassionate Allowance on humanitarian grounds—such as if the employee’s family faces financial hardship or serious illness.
Who Do These Rules Apply To?
These changes apply only to government employees appointed on or before December 31, 2003. The rules do not apply to railway workers, daily wage employees, or IAS, IPS, IFoS officers.
Why Only Employees Appointed Before 2004?
Employees appointed before 2004 fall under the Old Pension Scheme (OPS), which guarantees a lifelong pension based on the last salary.
Since the government fully funds OPS pensions, it can stop them if rules require.
However, employees hired after January 1, 2004, come under the National Pension System (NPS).
This is a contributory plan where both employee and government invest in a fund linked to market performance.
Since the pension depends on the employee’s own contributions and investments, it cannot be fully taken away.
