Govt amends pension rules: Here's how this will affect PSU employees
New Pension Rules 2025: The government has revised pension rules, affecting former government employees now in PSUs. Those dismissed for misconduct may lose their accrued pension benefits, a move aimed at enhancing accountability.
- May 29, 2025,
- Updated May 29, 2025 1:24 PM IST
The central government has introduced changes to pension regulations that could significantly impact employees transitioning from government departments to public sector undertakings (PSUs). According to the recently issued Central Civil Services (Pension) Amendment Rules, 2025, employees of PSUs who are dismissed or removed after their absorption due to misconduct now risk losing their pension benefits and entitlements accrued during their previous government service.
This modification, included in Rule 37(29C) of the CCS (Pension) Rules, 2021, reflects a stricter approach to disciplinary matters.
In the past, employees who moved to PSUs retained their pension benefits from government service even in cases of dismissal from the PSU. However, that safeguard has been removed.
The updated rule indicates that if a former government employee, now working at a PSU, is terminated for misconduct, they could forfeit their entire pension—both from PSU service and their previous government role.
Nonetheless, these decisions are not final and will be subject to review by the administrative ministry overseeing the relevant PSU, introducing a layer of checks and balances.
Additionally, the revised regulations align PSU dismissals with the standards applied to government employees under specific Rules of the CCS Pension Rules, ensuring that disciplinary actions have a consistent impact on retirement benefits.
This amendment targets employees initially appointed to government service on or before December 31, 2003, and is perceived as a move to enhance accountability among PSU personnel, emphasising that any misconduct throughout an employee’s career may have significant financial repercussions.
Legal experts believe this change could foster a more disciplined environment within PSUs, but it also elevates the stakes for employees facing disciplinary actions long after their time in government service.
The central government has introduced changes to pension regulations that could significantly impact employees transitioning from government departments to public sector undertakings (PSUs). According to the recently issued Central Civil Services (Pension) Amendment Rules, 2025, employees of PSUs who are dismissed or removed after their absorption due to misconduct now risk losing their pension benefits and entitlements accrued during their previous government service.
This modification, included in Rule 37(29C) of the CCS (Pension) Rules, 2021, reflects a stricter approach to disciplinary matters.
In the past, employees who moved to PSUs retained their pension benefits from government service even in cases of dismissal from the PSU. However, that safeguard has been removed.
The updated rule indicates that if a former government employee, now working at a PSU, is terminated for misconduct, they could forfeit their entire pension—both from PSU service and their previous government role.
Nonetheless, these decisions are not final and will be subject to review by the administrative ministry overseeing the relevant PSU, introducing a layer of checks and balances.
Additionally, the revised regulations align PSU dismissals with the standards applied to government employees under specific Rules of the CCS Pension Rules, ensuring that disciplinary actions have a consistent impact on retirement benefits.
This amendment targets employees initially appointed to government service on or before December 31, 2003, and is perceived as a move to enhance accountability among PSU personnel, emphasising that any misconduct throughout an employee’s career may have significant financial repercussions.
Legal experts believe this change could foster a more disciplined environment within PSUs, but it also elevates the stakes for employees facing disciplinary actions long after their time in government service.