Retirement from Service in India-1

 

Retirement from Service in India:

After working for so many years, the inevitable day in everyone's life is 'retirement'.

In India, the standard retirement age for government servants is 60 years old, meaning most employees must retire from service on the last day of the month in which they turn 60. In other words, it is also called to superannuation retirement. 

Retirement are of two types:

1.  Superannuation Retirement

2.  Voluntary Retirement

Retirement from Service in India refers to the conclusion of an individual’s professional career, typically based on reaching a specific age or after completing a certain period of service. The retirement process, benefits, and regulations vary depending on whether the individual is employed in the government, public sector, or private sector.

 

Types of Retirement in India:

 

1. Superannuation Retirement: 

   - Definition: Retirement upon reaching the official age limit, usually 60 years for government employees. 

   - Applicability: Common in government, PSU, and many private organizations. 

 

2. Voluntary Retirement (VRS): 

   - Definition: Employees can choose to retire early after completing a minimum number of years (usually 20 years) of service. 

   - Example: Government VRS schemes or corporate downsizing programs. 

 

3. Compulsory Retirement: 

   - Definition: Retirement enforced by the employer due to performance issues, misconduct, or restructuring. 

   - Legal Protection: Employees can challenge unfair compulsory retirements under service laws. 

 

4. Premature Retirement: 

   - Definition: Retirement before the standard age due to health issues, personal reasons, or organizational policies. 

   - Often Confused With: VRS, but differs as it may not be voluntary. 

 

 Retirement Benefits in India:

 

1. Pension Schemes: 

   - Government Employees: Defined Benefit Pension (under CCS Pension Rules). 

   - Private Sector: National Pension System (NPS) is common. 

 

2. Provident Fund (PF): 

   - Employees’ Provident Fund (EPF): Lump sum amount upon retirement. 

 

3. Gratuity: 

a)    Eligibility: After 5 years of continuous service. 

b)    Payment: Based on last drawn salary and years of service. 

 

4. Leave Encashment: 

   - Unused leave balance is often encashed at retirement. 

 

5. Medical Benefits: 

   - CGHS/ESIC: Health schemes for government employees. 

   -Corporate Health Insurance: Some companies extend post-retirement benefits. 

 

6. Retirement Savings Plans: 

   - PPF, Senior Citizen Savings Scheme (SCSS), Fixed Deposits, etc. 

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RETIRING GOVERNMENT EMPLOYEES

1.       WHO IS ELIGIBLE FOR PENSION?

a)    A Central Government employee who joined in pensionable service prior to O1/01/2004

b)    Contributory Provident Fund (CPF) beneficiaries in service on 01.01.1986 other than those who chose to continue under the CPF Scheme thereafter.

c)    Temporary employees retiring on superannuation pension/ invalidation with not less than 10 years' service qualifying for pension.

d)    An employee who is dismissed or removed from service forfeits his pension.

e)    Resignation from service entails forfeiture of past service.

`2.      WHEN CAN YOU GET PENSION?

a)    Pension is payable on retirement after attaining the age of compulsory retirement (superannuation) or in advance of this ageunder certain circumstances.

b)    Pension is also payable before the age of superannuation on voluntary retirement after rendering 20 years of qualifying service under Rule 48- of CCS (Pension) Rules or after attaining age of 50/55 years under FR 56(K) subject to other conditions as laid down in the Rules.

c)    Family pension is payable to an eligible family member on the death of an employee while in service or after retirement.

3.       CLASSES OF PENSION

a)    Pension granted underCCS (Pension) Rules, 1972 can be:

b)    •         Superannuation Pension

c)    •         Retiring Pension

d)    •         Invalid Pension

e)    •         Compensation Pension

f)      •         Compulsory Retirement Pension or Compassionate Allowance

g)    •         Pension on absorption to a PSU / Autonomous body.

 

4.       DOs FOR RETIREES FOR TIMELY      PROCESSING        OF THEIR PENSION PAPERS/CLAIMS

 

4.1.    DURING THE SERVICE, RETIREE IS REQUIRED TO ENSURETHAT

a)    •    His/her family details are kept updated

b)    •    All Nominations are kept updated

c)    •              Head of Office/ DDO has verified the service - no gaps in service

d)    •    You are entitled to Certificate/s of Qualifying Service on completing 18 years of service and 5 years before retirement. This period is not to be reopened for assessment

e)    •    Leave Record is kept updated

 

4.2.    POINTS TO BE KEPT IN MIND WHILE FILLING UP THE FORMSONBHAVISHYAPORTAL

a.     Choose your bank with caution - Please see your easy accessibility to the nearest branch of the Bank. This will be helpful as you grow in age.

b.    documents such as educational certificate/ Aadhaar Card/Driving license etc.

c.     The retiree should consider appropriately before applying to avail the facility ofCGHS/ FMA/CGHS (In-door)+ FMA/ health facility of previous organization as well as spouse's health facility.

d.    Commutation of the pension is optional and therefore a subjective concept. The retiree should take decision regarding the commutation of pension as per his/her requirement.

e.     Late submission of pension forms should be avoided. The Bhavishya system sends message to the retiree 8 months before the date of retirement; intimating the login Id and password. The retiree now requires filling his pension papers on Bhavishya system.

 

4.3.    BASIC STATISTICAL RETURNS (BSR) CODE

a.     It is mandatory to mention BSR Code of the Bank branch (where pension is desired to be credited) in the pension papers to enable CPAO to transmit the pension to pensioner's bank account. The BSR codes of the respective banks are available on the website of CPAO (https: / / cpao.nic.in/Ministry/ BSR.php).

4.4.    WHAT IS BSR CODE AND ITS USE

b.    Basic Statistical Returns (BSR) Code is a 7 digit code allotted by Reserve Bank of India (RBI) to all the registered Banks in India. The first 3 digits out of the 7 represent Bank name whereas the remaining 4 digits codify the branch of the Bank. BSR is a system to integrate the data relating to various commercial

 

5.2.    12-15 months before retirement: -

•         Commencement of service verification process by Head of Office

•         Assessment of outstanding dues

•         Reference to PAO and Directorate of Estates (for NDC)

5.3.    8 months before retirement:- Certificate regarding qualifying service and emoluments along with blank Form-5 to be given to retiring employee

5.4.    6 months before retirement retiring employee to give: -

•         filled in Form-5 with bank account details and joint photograph

•         details of family in Form 3, unmarried sons and married daughters are also the part of family and the same should be mentioned in Form 3

•                   nomination forms for gratuity, GPF, CGEGIS, Commuted

a.     value of pension and arrears of pension (Form-A)

b.    Undertaking for the Bank

c.     AnubhavForm

5.5.    4 months before retirement :- Pension papers (Form 5, Form 7 and Form 8) to be forwarded by HOO to PAO indicating Government dues to be recovered from Gratuity.

5.6.    1 month before retirement :- PPO to be sent by PAO to CPAO. CPAO to forward it with SSA to the Bank within 21 days.

a.     It is calculated @ 1 /2 month's emoluments for each completed six monthly period of qualifying service.

b.    An emolument for this purpose includes DA admissible at the time of retirement.

c.     There is no limit for minimum amount.

d.    This is a one-time lump sum payment in lieu of pension and is distinct from and is paid over and above the retirement gratuity referred to later in this Section.

7.1.2.  Pension

a.     If you retire under the Rules and have qualifying service of 10 years, your pension is calculated @ 50% of last payor average emoluments (i.e. average of the basic pay drawn byyou during the last 10 months of your service), whichever is more beneficial to you.

b.    Guaranteed minimum pension is Rs.9,000 (Rupees nine thousand only) per month. In addition, Dearness Relief is also payable thereon.

c.     Maximum limit on pension is Rs.1,25,000 (Rupees one lakh twenty five thousand only) per month. In addition, Dearness Relief is also payable thereon.

d.    Pension is payable upto and including the day of death.

7.1.3.  Commutation of Pension

a.     You have an option to commute a portion of pension, not exceeding 40% of it, into a lump sum payment.

b.    You need not undergo any medical examination if you exercise this option within one year of retirement.

 

7.1.5.  Dearness Relief

a)    Dearness relief is sanctioned as compensation against price rise.

b)    The quantum payable will be governed by the orders issued by the Government from time to time.

a.     All pensioners, irrespective of the amount of their pension, are eligible for this benefit (except these on re-employment).

b.    There is no ceiling in regard to the total of pension plus dearness relief which a pensioner can receive.

7.2.    FORFAMILIES

7.2.1.  Death Gratuity

•         Widow /widower or the nominee of an employee, dying while in service is entitled to receive Death Gratuity.

•         There is no requirement of completing any minimum length of qualifying service by the deceased employee for this purpose.

•         Entitlement is regulated as under:

Length of Qualifying Service	Rate of death gratuity
< 1 year	2  time of emoluments
One year or more but < 5 years	6  time of emoluments
5 years to 11 years	12 time of emoluments
11 years to 20 years	20 time of emoluments

 

 

•                   In case of a Govt. Servant who dies while in service family pension at enhanced rate is admissible for a period of ten years from the date fallowing the date of death. In case of death of a pensioner, family pension at enhanced rate would be payable for a period of seven years or till the pensioner would have attained the ageof 67 years, whichever is earlier.

a.     Like pension, family pension is also payable upto and including for the day of death of the recipient.

b.    But, family pension is payable for life to a son/ daughter who is suffering from any disorder/ disability of mind or is physically crippled/ disabled/ thus rendering him/her unable to earn a living. Dependent, divorced, widow and unmarried daughter, dependent parents, dependant disabled siblings are eligible for family pension for life subject to fulfilment of certain conditions.

7.2.3.  Dearness Relief

a.     Dearness relief to family pensioners is paid at the same rate and on the same conditions as for pensioners.

8.       FAMILY PENSION ON DEATH/DISCHARGE FOR GOVERNMENT EMPLOYEES UNDER NATIONAL PENSION SYSTEM (NPS)

a.     National Pension System (NPS) was introduced for Central Government civil employees w.e.f. 01.01.2004 by Ministry of Finance (Department of Economic Affairs) vide Notification No. 5/7 /2003-ECB  &  PR  dated  22.12.2003.  National  Pension

 

a.     System is mandatory for all new recruits joining the Central Government service (except armed forces) from 01.01.2004. Accordingly, the CCS (Pension) Rules, 1972 were amended vide notification dated 30.12.2003. CCS (Pension) Rules, 1972 are applicable to Government servants appointed on or before 31.12.2003. However, the benefits under Old pension scheme were extended to the Central Government employees covered under NPS vide Department of Pension and Pensioners' Welfare. in the event of their death or discharge from Government service on account of invalidation/ disability. In the case Government servant or his family avails the benefits under the old pension scheme in accordance with ..

 

b)    O.M. dated 05.05.2009, the entire accumulated pension fund of the Government servant under NPS would be surrendered into the Government account in accordance with Pension Fund Regulatory and Development Authority (Exits and Withdrawals underNPS) Regulations, 2015.

a.     The benefits of Retirement gratuity and death gratuity have also been extended to the Central Government employees covered under NPS on the same terms and conditions as are applicable under CCS(Pension) Rules, 1972.

9.       HOW TO CLAIM PENSION

a.      Pension claims are processed by your Head of Office. He is also responsible for settling the entitlements consequent to the death of an employee in harness.

b.     The process for sanctioning your pension claims is required to be initiated by the Head of Office 12 to 15 months in advance of the retirement date.

c.      Eight months prior to the retirement date, you are to furnish certain information (e.g. joint photo with wife/husband, family details, name of bank through which you desire to draw your pension, etc.) to your Head of Office in Form-5.

d.     Your co-operation with the Head of Office is vital to ensure timely settlement of your claim. Head of Office will send the pension papers to P&AO in form 7 & 8 within 4 months prior to your date of retirement.

e.      Pension is sanctioned by the Accounts Officer who is required to issue you Pension Payment Order (PPO) not later than one month in advance of the retirement date. He will send the PPO to CPAO who will issue SSA to designated pension paying bank within 21 days thereafter.

f.       If any delay is anticipated in this, the Head of Office is required to sanction provisional pension and provisional gratuity.

g.     Normally, family pension is also sanctioned to spouse at the same time as pension and indicated in the PPO. Family pension is to be drawn only after the death of the pensioner. In such cases no separate sanction for family pension is required. The spouse has to submit an application along with death certificate to the Bank, if he/she had a joint account with the deceased pensioner.

h.     For getting family pension in other cases, the deceased pensioner's family should apply in form-14

 

13.       NON-PENSIONARY RETIREMENT BENEFITS

13.1.                 Retired employees or their families are also entitled to the following non-pensionary retirement benefits:

•                       Cash equivalent of leave salary for earned leave due to the employee, subject to a maximum of 300 days.

•                       Encashment of half pay leave due to the officer to the extent of shortfall in earned leave to make up the maximum of 300 days ceiling on Earned Leave for encashment above.

•           Insurance cover and/ oraccumulation in the Saving Fund under the Central Government Employees Group Insurance Scheme, 1980.

•                       Normal dues from the GPF account and in the case of death of the employee while in service, additional amount limited to Rs.60000 from the Deposit-linked Insurance Scheme under the General Provident Fund Rules.

•                       On retirement, you are entitled to travel entitlement consisting of (i) Travel entitlement for self and  family

(ii)        Composite  Transfer  and  packing  grant  (CTG)

 

 

(iii)       Reimbursement of charges on transportation of personal effects (iv) Reimbursement of charges on transportation of conveyance as detailed below: -

13.2.     Travel Entitlements

Travel entitlements as prescribed for tour/transfer, except for International Travel, will be applicable in case of journeys on retirement. The general conditions of admissibility prescribed in S.R.147 will, however, continue to be applicable.

13.3.     Composite Transfer Grant (CTG)

(a)        The Composite Transfer Grant shall be paid at the rate of 80% of the last month's basic pay in case of those employees, who on retirement, settled down at places other than last station(s) of their duty located at a distance of or more than 20 km. However, in case of settlement to and from the Island territories of Andaman, Nicobar & Lakshadweep, CTG shall be paid at the rate of 100% of last month's basic pay. Further, NPA and MSP shall not be included as part of basic pay while determining entitlement for CTG. The transfer incidentals and road mileage for journeys between the residence and the railway station/bus stand, etc., at the old and new station, are already subsumed in the composite transfer grant and will not be separately admissible.

(b)        As in the case of serving employees, government servants who, on retirement, settle at the last station of duty itself or within a distance of less than 20 kms may be paid one third of the CTG subject to the condition that a change of residence is actually involved.

 13.4.    Transportation of personal Effects

Presently the scale of transportation of Personal Effects for which re-imbursement is admissible is as follows:-

Level in Pay matrix	By Train/Steamer	By Road
12 and above	6000 kg by goods train/ 4 wheeler wagon/1 double container	Rs.50/- per km
6 to 11	6000 kg by goods train/ 4 wheeler wagon/1 single container	Rs.50/- per km
5	3000 kg	Rs.25/- per km
4 and below	1500 kg	Rs.15/- per km

13.5.     Transportation of conveyance

Level in pay matrix	Reimbursement
6 and above	1 motor car etc., or 1 motor cycle/scooter
5 and below	1 motor cycle / scooter / bicycle

 

14.       FIXED MEDICAL ALLOWANCE

•                     Fixed Medical Allowance @ Rs. I 000 per month is paid to pensioners/family pensioners who are residing outside the jurisdictional area of CGHS Scheme and other such schemes of other Ministries/Department and would have been eligible for this scheme while in service.

•                  Medical facilities under the Central Government Health Scheme (CGHS) in various cities/areas covered by the scheme are also available to eligible Central Govt. Pensioners on contribution/ payment basis. CGHS facility (both OPD and IPD) is also available to pensioners residing outside CGHS area.

•                 Pensioners residing outside CGHS area but in receipt of FMA, are not eligible to avail OPD facilities at wellness centers. They can, however, avail IPD facilities on making contribution under the Central Government Health Scheme (CGHS).

15.       ANUBHAV

DoP&PW has also provided you a platform to share your experience of working with the Government through a write-up - the write-ups which the Government may share online with other Ministries/ Departments. This platform has been provided with the intention to garner the resources of retiring employees to help create wealth of information for the Government. An annual award scheme is also in existence to attract quality write-ups. The details can be seen at http://pensionersportal.gov.in/Anubhav.

16.       SANKALP

Believing that the life after retirement is a second inning in the life of a Government Employee, the Department of Pension & Pensioners' Welfare has taken up an initiative to motivate and channelize the skill, experience and time available with Central Government Pensioners into meaningful social activities through a platform entitled "SANKALP". Under this initiative, you can register yourself for voluntary work on SANKALP

17.       DISBURSEMENT OF MONTHLY PENSION

•                       Payment of pension to Central Government Civil Pensioners is made by all nationalized banks authorized by Reserve Bank of India. In addition RBI has also authorized HDFC Bank Ltd., ICICI Bank Ltd., IDBI Bank Ltd. and UTI Bank Ltd. (now Axis Bank Ltd.) to make payment of pension to Central Government Civil Pensioners.

 Pensionary and other dues payable to an IAS officer retiring on superannuation (age 60 years) from apex scale (Level-I7, pay Rs. 2,25,000/-)

 

0          Last Pay Drawn           Rs.2,25,000 /-  

2          Basic Pension Rs.l, 12,500/- (50 % of the last paydrawn)      

3          Maximum portion of commutation of pension permissible    40%    

4          Commutation value payable on retirement     1,12,500 x 40/ 100 = Rs.45000 / -

             Rs.45000 x 12 x 8.194 =  Rs.44,24,760 / -       

5          Residual Pension        1,12,000 - 45,000 = 67,500        Payable as monthly pension by credit to the bank account of pensioner. In addition the dearness relief as per rates announced by the Govt. from time to time is also payable.

6          Gratuity           1/4th of emoluments (basic pay + DA) for every half year of qualifying service subject to maximum of Rs.20.00 lakh        To be paid by Head of Office

7          Leave Encashment      (2,25,000 + DA) x 300 divided by 30 (if the officer has 300 days EL at his credit). If the number of EL at the credit is less than 300 days, encashment of half pay leave due to officer to the extent of shortfall in earned leave to make up the maximum of 300 days ceiling earned leave for encashment above is also given.       To be paid by Head of Office

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