Salary / Pension to Retired Employees

Salary / Pension to Retired Employees

Central Government civil servants appointed before 1.1.2004 are governed by the Central Civil Services (Pension) Rules, 1972. In accordance with Rule 49 of these rules, on retirement after completing a qualifying service of not less than 10 years, a Government servant is entitled to a pension calculated @ 50% per cent of his last drawn pay or 50% of the average of last 10 months’ pay, whichever is more beneficial to him, subject to a minimum of Rs. 9,000/- per month and a maximum of Rs.1,25,000/- per month.

A Government servant appointed on or after 1.1.2004 is governed by the National Pension System. Under this system, a Government servant is required to mandatorily contribute during service 10% of his pay and dearness allowance to his pension account and an equal amount of 10% of pay and dearness allowance is contributed by the Government to the employee’s pension account. On retirement on superannuation, the retiring Government employee is mandatorily required to invest at least 40% of the accumulated pension wealth to purchase an annuity from an insurance company regulated by the Insurance Regulatory Development Authority (IRDA) and a maximum of 60% of the accumulated pension wealth is given to the individual in lump sum.

On retirement, all Government servants are entitled to a retirement gratuity based on their qualifying service subject to a maximum of Rs.20 lakh.

This was stated by the Minister of State for Personnel, Public Grievances & Pensions and Prime Minister’s Office, Dr. Jitendra Singh in a written reply to question in the Lok Sabha today.