Retirement benefits for the Central Government Employees

Pension

A Central Government servant with a minimum of 10 years of service retiring in accordance with the Pension Rules is entitled to receive the statutory pension.

In the case of Family Pension, the widow is eligible to receive family pension on death of her spouse after completion of one year of continuous service or even before completion of one year if the Government servant had been examined by the appropriate Medical Authority and declared fit for Government service.

W.e.f 1.1.2006, Pension is calculated with reference to emoluments (i.e. .last basic pay) or average emoluments (i.e. the average of the basic pay drawn during the last 10 months of the service) whichever is more beneficial. The amount of pension is 50% of the emoluments or average emoluments whichever is beneficial.

The minimum pension presently is Rs. 9000 per month. The maximum limit on pension is 50% of the highest pay in the Government of India (presently Rs. 1,25,000) per month. Pension is payable up to and including the date of death.

Commutation of Pension

A Central Government employee has the option of converting a portion of his or her pension, up to 40%, into a lump sum payment. If the option is exercised within one year of retirement, no medical examination is required. If the option is exercised after one year, he or she will be subjected to a medical examination by the specified competent authority.

The Commutation Table is used to calculate the lump sum payable.

The monthly pension will be reduced by the amount commuted, and the amount commuted will be restored after 15 years from the date of receipt of the commuted value of the pension. Dearness Relief, on the other hand, will continue to be calculated using the original pension (i.e. without reduction of commuted portion).

According to the New Table annexed to the CCS (Commutation of Pension) Rules, 1981, the commutation factor will be based on age next birthday on the date commutation becomes absolute.

The formula for calculating the commuted value of pension (CVP) is

CVP = 40 % (X) Commutation factor* (X)12

Death/Retirement Gratuity

Retirement Gratuity

This is due to the retiring government employee. This one-time lump sum benefit requires a minimum of 5 years of qualifying service and eligibility to receive service gratuity/pension. For each completed six-month period of qualifying service, a retirement gratuity of 1/4th of a month's Basic Pay plus Dearness Allowance is drawn on the date of retirement. There is no minimum or maximum amount of gratuity. The retirement gratuity is 1612 times the basic pay plus DA, up to a maximum of Rs. 20 lakhs, for qualifying service of 33 years or more.

Death Gratuity

This is a one-time lump sum benefit payable to the nominee or family member of a Government servant dying in harness. There is no stipulation in regard to any minimum length of service rendered by the deceased employee. Entitlement of death gratuity is regulated as under:

The maximum amount of Death Gratuity admissible is Rs. 20 lakhs w.e.f. 1.1.2016

Service Gratuity

A retiring Government servant will be entitled to receive service gratuity (and not pension) if the total qualifying service is less than 10 years. The admissible amount is half a month’s basic pay last drawn plus DA for each completed 6 monthly periods of qualifying service. This one-time lump sum payment is distinct from retirement gratuity and is paid over and above the retirement gratuity.

Issue of No Demand Certificate

Dues owed by retiring employees for License Fee for Government accommodation, advances, overpayment of pay and allowances must be assessed by the Head of Office and communicated to the Accounts Officer two months before the date of retirement so that they can be recovered from retirement gratuity before payment. The License Fee for those occupying Government accommodation is considered for this purpose up to the end of the permissible period for which accommodation can be retained after retirement under the Rules on normal rent. The Directorate of Estates is in charge of recovering the License Fee after that time period has passed. If final dues are not assessed on time for any reason, then 10% of gratuity is withheld on the basis of a commutation from the Directorate of Estates in this regard.

General Provident Fund and Incentives

As per General Provident fund (Central Services) Rules, 1960 all temporary Government servants after a continuous service of one year, all re-employed pensioners (Other than those eligible for admission to the Contributory Provident Fund) and all permanent Government servants are eligible to subscribe to the Fund. However, these rules are not applicable to any of the Government Servants who join service on or after 1.1.2004. A subscriber, at the time of joining the fund, is required to make a nomination, in the prescribed form, conferring on one or more persons the right to receive the amount that may stand to his credit in the fund in the event of his death, before that amount has become payable or having become payable has not been paid. A subscriber shall subscribe monthly to the Fund except during the period when he is under suspension. Subscriptions to the Provident Fund are stopped 3 months prior to the date of superannuation. Rates of subscription shall not be less than 6% of subscriber’s emoluments are not more than his emoluments. The rate of interest varies according to notifications of the Government issued from time to time. The rules provide for drawing advances/ withdrawals from the fund for specific purposes.
The conditions for withdrawal from the fund have been liberalized and now no documentary proof is required to be furnished by the subscriber for GPF withdrawal. On the retirement of a subscriber, instructions have been issued for immediate payment of the final balance on retirement. No application is required to be submitted by the subscriber for final payment from the fund. 

Deposit Linked Insurance Scheme

Under the GPF Rules, on the death of a subscriber, the person entitled to receive the amount standing to the credit of the subscriber shall be paid an additional amount equal to the average balance in the account during the 3 years immediately preceding the death of the subscriber subject to certain conditions provided in the relevant Rule. The additional amount payable under that Rule shall not exceed Rs. 60,000/-. To get this benefit, the subscriber should have put in at least 5 years of service at the time of his/her death.

Contributory Provident Fund

The Contributory Provident Fund Rules (India),,1962 are applicable to every non-pensionable servant of the Government belonging to any of the services under the control of the President. A subscriber, at the time of joining the Fund, is required to make a nomination in the prescribed Form conferring on one or more persons the right to receive the amount that may stand to his credit in the Fund in the event of his death, before that amount has become payable or having become payable has not been paid.

A subscriber shall subscribe monthly to the Fund when on duty or Foreign Service but not during the period of suspension. Rates of subscription shall not be less than 10% of the emoluments and not more than his emoluments. The employer's contribution at that percentage prescribed by the Government will be credited to the subscriber's account and this is 10%. The Rules provide for drawing advances/ withdrawals from the CPF for specific purposes. As in GPF Rules, the CPF Rules also provide for Deposit Linked Insurance Scheme.

Leave Encashment

Encashment of leave is a benefit granted under the CCS (Leave) Rules and is not a pensionary benefit. Encashment of Earned Leave/Half Pay Leave standing at the credit of the retiring Government servant is admissible on the date of retirement subject to a maximum of 300 days.

Central Government Employees Group Insurance Scheme

A portion of monthly contributions paid while in service is credited in a Saving Fund, on which interest accrues. A Government servant while entering service has to apply in Form No. 4 of the above Scheme to the Head of Office, who shall issue a sanction for the payment of subscriber's accumulation in the Savings Fund segment together with interest and arrange for its disbursement, soon after retirement. Payments under this Scheme are made in accordance with the Table of Benefit (as issued by the Department of Expenditure) which takes into account interest up to the date of cessation of service. Insurance cover benefit under this Scheme is available to the family in the event of death of the subscriber.