Centre issues key clarification on PF settlement for retired govt employees

The central government has issued clarifications regarding the General Provident Fund (GPF) disbursement process on retirement for government employees.

The Department of Pension and Pensioners Welfare (DoPPW) issued new instructions on October 25, 2024, due to frequent inquiries regarding interest payment on delayed GPF disbursement after retirement. These instructions emphasize the need for timely handling at every stage from preparation of retirement list to issuance of Pension Payment Order (PPO).

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The notice also gives details of payment of interest on delayed GPF final payments for retired government employees. It also mentions the duties of the concerned officials and the consequences of delay in disbursement. The important points of the Central Government’s clarification on GPF disbursement to retired employees are as follows…

1. Timely payment: Rule 34 of the General Provident Fund (Central Services) Rules, 1960 mandates that the accounts officer should ensure that the GPF amount is paid promptly on the retirement of the subscriber.

2. Unconditional disbursement: The GPF balance is the property of the retired government employee and its disbursement is unaffected by any pending disciplinary proceedings.

3. Interest on delayed payments: Rule 11(4) states that if the GPF balance is not paid at the time of retirement, interest should be charged for the period beyond the retirement date.

4. Interest Payment Approval Process: The Pay and Accounts Office (PAO) can approve interest for a delay of up to 6 months after retirement. In case of delay beyond six months, approval from the Head of the Accounts Office is required for interest payment. In case of delay beyond one year, authorization from the Controller of Accounts/Financial Advisor is required for interest payment.

5. Extension of Delay: Cases involving interest payment will be referred to the Secretary of the concerned administrative Ministry or Department to prevent additional financial burden due to delay in GPF payment.

The Secretary will assign responsibility at each stage of the GPF payment process to prevent delays, avoid unnecessary interest payments and ensure timely disbursement.

What is GPF

GPF is a kind of Provident Fund account but only government employees can benefit from it. Government employees have to deposit a certain part of their salary in GPF. Contribution to GPF is mandatory for a certain category of government employees. The total amount prepared from the contribution made by the employees to GPF during the employment term is paid to the employee at the time of retirement. The government does not contribute to GPF, only the employee contributes. The Finance Ministry changes the interest rate of GPF every quarter.

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