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India Tightens Pension Rules to Forfeit Benefits for PSU Employees Dismissed for Misconduct

The Department of Pension and Pensioners’ Welfare has applied a Supreme Court directive to impose full pension forfeiture on central staff absorbed into PSUs before 2004.

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Pension | Image: Pension

Overview

  • The Central Civil Services (Pension) Amendment Rules, 2025 took effect on May 22, allowing complete forfeiture of retirement benefits for PSU employees removed for misconduct after absorption.
  • A new clause in Rule 37(29C) specifies that dismissal or removal from PSU service voids pension earned during prior government tenure.
  • PSU dismissal decisions must now undergo review by the administrative ministry overseeing the undertaking before pension denial can be enforced.
  • The amendments cover central government employees appointed on or before December 31, 2003 who were later absorbed into public sector undertakings.
  • Exclusions from the new forfeiture provisions include railway employees, casual and daily wage workers, and officers of the IAS, IPS and Indian Forest Service.