Centre's new rule to deny pension to ex-govt staff in PSUs for misconduct

Centre amends pension rules: PSU employees dismissed for misconduct will now lose pension benefits from previous government service. Know what's changed under Rule 37 and its implications

The Centre has amended regulations to deny pension to public sector employees dismissed for misconduct, even if their previous government service was otherwise clean. The purpose is accountability in public service, especially post-absorption in a public sector undertaking (PSU).

 

What has changed?

 

The Department of Pension and Pensioners’ Welfare, under the Ministry of Personnel, has issued a notification revising Rule 37 of the Central Civil Services (Pension) Rules, 2021.

 

Under the new amendment:

 

If a government employee, after being absorbed by a PSU, is dismissed or removed due to misconduct, they will lose pension and other retirement benefits earned during their government service.

 

 

This means past years of government service will not be counted for pension if misconduct occurs after joining a PSU.

 

Why it matters

 

Previously, even if a person was dismissed from a PSU, their pension benefits from earlier government service remained protected. The new rule eliminates that cushion, treating dismissal from a PSU on par with dismissal from direct government service.  ALSO READ | New pension rules for divorced daughters, claim process made easy

 

This has wide implications for:

 

Retired government officials now working in PSUs.

 

Current PSU employees who were earlier government servants.

 

Review mechanism included

 

To ensure fairness, the rule provides a review clause:

 

The decision of the PSU in such dismissals will be subject to review by the administrative ministry overseeing the PSU.

 

Applicable rules for government servants’ disciplinary proceedings will also apply analogously.

 

What employees should know

 

Employees in PSUs who earlier served in government roles should take note of the following:

 

Any post-absorption misconduct leading to dismissal could cost them entire retirement benefits.

 

Even if misconduct occurs many years after switching to a PSU, pension earned from earlier government service is at stake.

 

The amendment reflects the government’s intent to enforce stricter discipline in public sector roles. While it closes a potential loophole for those with past government service, it also increases the need for vigilance and ethical conduct throughout a public employee’s career, regardless of the organisation they end up in.