New pension rules for PSU employees: Key things to know
The central government has amended pension regulations that could have major implications for employees who move from government departments to public sector undertakings (PSUs). Under the newly notified Central Civil Services (Pension) Amendment Rules, 2025, any PSU employee dismissed or removed after absorption due to misconduct could forfeit their PSU-related benefits and pension entitlements earned during their earlier government service.advertisementThe change, incorporated under Rule 37(29C) of the CCS (Pension) Rules, 2021, marks a toughening of the disciplinary framework.
Previously, employees absorbed into PSUs retained pension benefits from their time in government service, even if they were later dismissed from the PSU. That protection is now gone.The revised rule states that if an absorbed PSU employee is terminated for misconduct, their entire pension, both from PSU service and previous government service, can be forfeited.However, such decisions will not be absolute. They must undergo review by the administrative ministry responsible for the concerned PSU, adding a layer of checks and balances to the process.The rules also align PSU dismissals with the standards applied to government employees under Rules 7, 8, 41, and 44 of the CCS Pension Rules, ensuring consistency in how disciplinary actions impact retirement benefits.advertisementThis amendment applies to employees who were initially appointed to government service on or before December 31, 2003. It is being seen as an attempt to reinforce accountability among PSU staff, signalling that misconduct at any point in an employee's career can have long-lasting financial consequences.Legal experts suggest the move could lead to a more disciplined approach within PSUs, but it also raises the stakes for employees who may face disciplinary action long after leaving government service.
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