Centre amends key pension rules; PSU employees to lose retirement benefits on dismissal

The dismissal or removal of an employee of a public sector undertaking (PSU) will lead to forfeiture of the retirement benefits, the Centre has said.

However, the decision of such dismissal or removal shall be subject to review by the administrative ministry concerned, it said.

The Personnel Ministry has effected key changes in the Central Civil Services (Pension) Rules, 2021 in this regard.

According to the recently-notified Central Civil Services (Pension) Amendment Rules, 2025, "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," read the new rules notified on May 22.

Earlier, the rules did not allow forfeiture of the retirement benefits in case of dismissal or removal from service of the public sector undertaking employee, after his absorption in such undertaking, for any subsequent misconduct.

The new rules further said that the provisions related to continuation or grant of  "pension and family pension subject to future good conduct" and "compassionate allowance" would also be applicable on such dismissed or retrenched employees.

The Central Civil Services (Pension) Rules, 2021 apply to the government servants appointed on or before December 31, 2003, except "railway servants", "persons in casual and daily rated employment" and officers of Indian Administrative Service (IAS), Indian Police Service (IPS) and Indian Forest Service (IFoS) among others.