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These amendments apply to central government employees appointed on or before December 31, 2003, excluding some categories.
New Pension Rules 2025: Changes for PSU employees become effective from May 22.
New Pension Rules 2025: In a significant policy shift, the Central government has amended pension rules, allowing complete forfeiture of retirement benefits for certain public sector employees dismissed for misconduct. The changes come through the Central Civil Services (Pension) Amendment Rules, 2025, which took effect on May 22, 2025.
Key Change: Full Forfeiture Of Pension Benefits
Under the new rules, if a Public Sector Undertaking (PSU) employee—previously absorbed from government service—is dismissed or removed for misconduct, they can now lose their entire retirement benefits, including the pension earned during their earlier tenure with the government.
This marks a major departure from earlier provisions, which protected pension benefits accrued during government service even after a PSU dismissal.
The amended Rule 37(29C) is as follows:
“… the dismissal or removal from service of the public sector undertaking of any employee after his absorption in such undertaking for any subsequent misconduct shall lead to forfeiture of the retirement benefits for the service rendered under the Government also and in the event of his dismissal or removal or retrenchment the decision of the undertaking shall be subject to review by the Ministry administratively concerned with the undertaking. For the purpose of this Rule, the relevant provisions of Rule 7 and 8 read with Rule 41 and Rule 44(5)(a) &(b) would be applicable analogous as is applicable to a Government servant under these Rules
Review Mechanism Introduced
To ensure fairness, such dismissal or removal will now be subject to a review by the administrative ministry concerned. This means the PSU’s decision won’t be automatically final.
Despite the stricter rules, the government has retained some flexibility. Dismissed or retrenched employees may still receive pension benefits under certain conditions:
Pension and family pension may be granted, depending on future good conduct.
Compassionate allowance may be considered on a case-by-case basis.
Who Falls Under These Rules?
These amendments apply to central government employees appointed on or before December 31, 2003, but exclude the following:
- Railway employees
- Casual and daily wage workers
- IAS, IPS, and Indian Forest Service (IFoS) officers
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