Notional pay to be used for Gratuity & Pension calculation if staff dies during penalty

 In the event of death, the gratuity and family pension (CCS Pension Rules 1972) for dependents of Central Government Employees shall be based on the actual pay drawn. If a Central Government employee dies while on reduced pay as a result of a penalty, the family pension and gratuity will not be affected. The Department of Pension and Pensioners' Welfare (DoPPW) has issued an order that would assess the family pension and death gratuity based on the notional salary that such employee would have been entitled to on the date of death. And such fictitious compensation would be considered emoluments for the purposes of calculating the family pension and death gratuity. The hypothetical remuneration would be what he would have received if the penalty had not been imposed. The impact of the penalty is limited to the period specified in the order of penalty and the Government servant regains his pay and increments after the period of penalty is over.

DoPPW’s new instructions will be applicable with immediate effect and the past cases will not be re-opened. “However, the cases where the death of a Government servant has occurred before the issue of these instructions but family pension and death gratuity has not been determined so far may also be decided in accordance with these instructions,” the office memorandum said.

The DoPPW has been receiving a lot of requests on clarity on computing family pension and death gratuity if the employee dies while receiving reduced pay due to a penalty. The department had also received questions for clarification on whether the family pension and gratuity would be calculated on the lower pay that the Government servant was actually earning on the day of death or on the pay that he would have drawn if such a penalty had not been imposed.

Based on this, the DoPPW decided and issued OM to calculate family pension and gratuity based on the "notional pay" instead of the reduced salary due to penalty on the last day of such employees.

“It has, accordingly, been decided that in cases where a Government servant dies during the currency of a penalty on expiry of which he would have regained the same pay which he would have drawn if the penalty had not been imposed on him, the family pension and death gratuity in respect of such Government servant shall be determined based on the notional pay which he would have been entitled to on the date of death and such notional pay may be treated as emoluments for this purpose,” the DoPPW said in an Office Memorandum dated December 9, 2021.

The Department observed that calculating the widow/family's pension and death gratuity based on real pay drawn in the event of death within the penalty's currency period would result in a lower death gratuity and a lower family pension for the widow/family. However, the disciplinary authority may not have intended this while applying the penalty." As a result, in cases where the disciplinary authority intended to limit the impact of the penalty on the Government servant for a specific period only," the DoPPW observed, "determination of family pension and death gratuity on the basis of reduced pay during the currency of such penalty would result in an unintended hardship to the family of the Government servant who dies during the currency of such penalty would result in an unintended hardship to the family of the Government servant who dies during the currency of such penalty would result in financial difficulties.