Central Government has introduced a major amendment to the Central Civil Services (Pension) Rules, 2021, significantly impacting employees of Public Sector Undertakings (PSU).
Under the Central Civil Services (Pension) Amendment Rules, 2025, PSU employees dismissed or removed due to misconduct will lose their retirement benefits.
This includes the forfeiture of pensions, significantly impacting affected employees.
This amendment marks a strict policy shift, linking pension eligibility directly to an employee’s conduct and accountability.
The government seeks to curb corruption and misconduct within PSUs, enforcing stricter regulations.
At the same time, it ensures that retirement benefits are reserved for employees who uphold good professional standing.
Key Changes in Pension Rules
Previously, PSU employees absorbed from government service were allowed to retain their retirement benefits, even after dismissal.
This meant that even those removed for misconduct continued to receive pension entitlements.
The new amendment eliminates the previous provision that allowed dismissed employees to retain retirement benefits.
Now, any employee removed for misconduct will lose all pension entitlements, including those accrued under government service.
The decision to dismiss or remove an employee will now be reviewed by the administrative ministry overseeing the PSU before final approval.
This added layer of scrutiny ensures that actions are fair and justified before finalizing the forfeiture of benefits.
Impact on PSU Employees
The amendment affects lakhs of PSU employees, particularly those who transitioned from government service to public sector enterprises.
Employees who are terminated due to corruption or serious misconduct will no longer receive pension or post-retirement entitlements.
The new rules clarify that dismissed employees can still receive pension continuation, family pension, and compassionate allowance under specific conditions.
However, these benefits will only apply if they meet certain criteria and maintain future good conduct.
Government’s Rationale Behind the Amendment
The Department of Personnel and Training (DoPT), under the Ministry of Personnel, Public Grievances and Pensions, has stated that the amendment is part of a broader administrative reform aimed at enhancing ethical standards and transparency in public service.
By linking pension eligibility to an employee’s conduct, the government hopes to deter illegal activities and strengthen accountability within PSUs.
The move is expected to prompt a reevaluation of internal compliance and conduct mechanisms across public sector organizations.
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