New Pension Rules: Pension can be taken away from PSU employees, rules changed

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New Pension Rules: The central government has made an important amendment in the pension rules and clarified that employees who are removed from service under disciplinary action in the public sector (PSU) can now be deprived of all their retirement benefits including pension.

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This change has come into effect from May 22 through the Central Civil Services (Pension) Amendment Rules, 2025.

According to the system till now, if an employee joined a PSU permanently from the Central Government service, and was later dismissed from there, then the pension earned during his government service was not affected. But now the employees dismissed from PSU due to misconduct or indiscipline will not get the retirement benefits earned during the previous government service.

A review process will also be implemented

The final decision in such cases of dismissal from PSUs will be taken only after review by the concerned administrative ministry. This will ensure that every case is dealt with on the basis of facts and due process.

Pension can be available in some cases

The amended rules also provide that pension can be considered in certain cases. For example, after better future behaviour, the employee’s pension can be restored or a family pension can be given.

Also, the government can consider giving Compassionate Allowance on humanitarian grounds. This is given in certain situations, such as when the financial condition of the employee is very bad, his family is affected, or he is suffering from some serious illness or helplessness.

To whom will the revised rules apply?

This amendment will apply to such government employees who were appointed on or before 31 December 2003. But this rule will not apply to railway employees, daily wage earners and IAS, IPS, IFoS officers.

Why appointments after 2003 will not be affected

Government employees appointed till 31 December 2003 were covered under the Old Pension Scheme (OPS). In this, the government guarantees pension i.e. you get lifelong pension based on your last salary.

But, all the government employees appointed from 1st January 2004 come under the National Pension System (NPS). This is a contributory scheme. In this, both the government and the employees together contribute to a fund. There is no guarantee of pension in this, it is linked to the market.

In OPS, the entire pension is provided by the government, so it can stop it. However, in NPS, the pension is generated from the employee’s own deposits and investments. It is almost impossible to seize it completely, because the funds are deposited in the name of the employee.

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