New Pension Rule for PSU Employees: What You Need to Know

The Central Government has recently amended the Central Civil Services (Pension) Rules, 2021, bringing a major change that impacts employees of Public Sector Undertakings (PSUs). This new rule introduces a stricter stance on misconduct, which can lead to the forfeiture of retirement benefits earned during prior government service.

The amended rule, specifically Rule 37(29C), states that if a PSU employee is dismissed or removed from service due to misconduct after being absorbed into the PSU, they will not only lose their PSU benefits but also the pension benefits they accrued during their time in government service. This is a significant shift from the previous policy, where such benefits were not forfeited.

The specific language of the amended rule 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.'

Importantly, any dismissal, removal, or retrenchment decision will be subject to review by the administrative ministry concerned. This additional layer of oversight ensures that decisions are made fairly and transparently, providing a safeguard against arbitrary actions.

The new rule marks a major shift from the earlier policy, which did not result in the forfeiture of retirement benefits from earlier government service if a PSU employee was removed or dismissed post-absorption. This change underscores a stronger emphasis on discipline and accountability within PSUs.

The amendment applies to government servants appointed on or before December 31, 2003. This change emphasizes that misconduct at any stage of an employee's career can have serious financial consequences, even affecting benefits from previous government service. For current and prospective PSU employees, this rule serves as a reminder to maintain high standards of conduct and performance.

In summary, the new pension rule for PSU employees introduces stricter consequences for misconduct, ensuring that employees are held accountable for their actions. This policy aims to promote a culture of integrity and responsibility within public sector organizations, ultimately benefiting both the employees and the institutions they serve.