Centre notifies new pension rule for PSU employees: Here’s what it means
The Central Government has amended the Central Civil Services (Pension) Rules, 2021, introducing a major change that affects PSU employees. Now, dismissal or removal from service in a PSU can lead to forfeiture of retirement benefits earned during prior government service.
As per the CCS (Pension) Amendment Rules, 2025, if a PSU employee is dismissed or removed after absorption due to misconduct, they will lose not just PSU benefits but also pension benefits accrued under the government service.
The amended Rule 37(29C) 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 such dismissal, removal, or retrenchment will be subject to review by the administrative ministry concerned. This offers an additional layer of oversight and fairness in decision-making.
Earlier, retirement benefits from earlier government service were not forfeited if a PSU employee was removed or dismissed post-absorption. This amendment reverses that policy.
This amendment applies to government servants appointed on or before December 31, 2003. This change emphasizes discipline and accountability among absorbed PSU employees, reinforcing that misconduct at any stage can have serious financial consequences, even affecting benefits from previous government service.
