Retirement Benefits applicable for a Central Government Employee – A Recap
Retirement Benefits applicable for retiring Central Government Employees – Pension, Commutation of Pension, Gratuity, Leave Salary, and CGEGIS
Let’s have a look at the retirement benefits for a central government employee. These benefits are also applicable for an employee who intends to quit.
Calculation of Emoluments and Average Emoluments
The terms emoluments and average emoluments gain significance for determining pension, Service Gratuity and Death Gratuity in respect of a Central Government Employee when he / she retires from government Service or dies before superannuation.
Pension is normally based on emoluments or average emoluments drawn during the last ten months of service, whichever is more beneficial whereas Gratuity is based on emoluments.
When Basic Pay only is taken as Emoluments?
For calculating pensionary benefits Emoluments consists of basic pay as defined in Rules 9(2) (a) (i) of Fundamental Rules.
When Basic Pay is taken along with Dearness Allowance to calculate Emoluments ?
For service gratuity, retirement gratuity and death gratuity, Dearness Allowance on the date of retirement/ death will also be taken as emoluments.
The expression emoluments means basic pay as defined in Rule 9 (21) (a) (i) of the Fundamental Rules which a Government servant was receiving immediately before his retirement or on the date of his death and will also include non-practising allowance granted to medical officer in lieu of private practice. Emoluments do not include special allowance, personal pay, deputation ( duty) allowance, etc.
Explanation – Stagnation increment shall be treated as emoluments for calculation of retirement benefits.
*Explanation: (a) The term ‘Emoluments’ for purposes of calculating various pensionary benefits other than various kinds of Gratuity shall have the same meaning as in Rule 33 of the Central Civil Services (Pension) Rules, 1972.
(b) Basic pay in the revised pay structure means the pay drawn in the prescribed level in the Pay Matrix with effect from 01.01.2016 but does not include any other type of pay like special pay, etc.
(c) In the case of all kinds of gratuity, dearness allowance admissible on the date of retirement/ death shall continue to be treated as emoluments along with the emoluments as defined in Paragraph 1 above.
If a Government servant immediately before his retirement or death while in service had been absent from duty on leave for which leave salary is payable or having been suspended had been reinstated without forfeiture of service, the emoluments which he would have drawn had he not been absent from duty or suspended shall be the emoluments for the purposes of this rule
provided that any increase in pay other than the increment referred to in Note 4 which is not actually drawn shall not form part of his emoluments.
Note-2: Where a Government servant immediately before his retirement or death while in service had proceeded on leave for which leave salary is payable after having held a higher appointment whether in an officiating or temporary capacity, the benefit of emoluments drawn in such higher appointment shall be given only if it is certified that the Government servant would have continued to hold the higher appointment but for his proceeding on leave.
Note-3: If a Government servant immediately before his retirement or death while in service had been absent from duty on extraordinary leave or had been under suspension, the period where of does not count as service, the emoluments which he drew immediately before proceeding on such leave or being placed under suspension shall be the emoluments for the purposes of this rule.
Note-4: If a Government servant immediately before his retirement or death while in service, was on earned leave, and earned an increment which was not withheld, such increment, though not actually drawn, shall form part of his emoluments provided that the increment was earned during the currency of the earned leave not exceeding one hundred and twenty days, or during the first one hundred and twenty days of earned leave where such leave was for more than one hundred and twenty days.
Note-5: Pay drawn by a Government servant while on deputation to the Armed Forces of India shall be treated as emoluments.
Note-6: Pay drawn by a Government servant while on foreign service shall not be treated as emoluments, but the pay which he would have drawn under the Government had he not been on foreign service shall alone be treated as emoluments.
Note-7: Where a pensioner who is re-employed in Government service elects in terms of clause (a) of sub-rule (1) of Rule 18 of CCS (Pension) Rules, 1972 or clause (a) of sub-rule (1) of Rule 19 of CCS (Pension) Rules, 1972 to retain his pension for earlier service and whose pay on re-employment has been reduced by an amount not exceeding his pension, the element of pension by which his pay is reduced shall be treated as emoluments.
Note-8: When a Government servant has been transferred to an autonomous body consequent on the conversion of a Department of the Government into such a body and the Government servant so transferred opts to retain the pensionary benefits under the rules of the Government, the emoluments drawn under the autonomous body shall be treated as emoluments for the purpose of this rule.
Average emoluments shall be determined with reference to the emoluments drawn by a Government servant during the last ten months of his service.
Provided that any increase in pay other than the increment referred to in Note 3 which is not actually drawn shall not form part of his emoluments.
Note-2: If, during the last ten months of his service, a Government servant had been absent from duty on extraordinary leave, or had been under suspension the period whereof does not count as service, the aforesaid period of leave or suspension shall be disregarded in the calculation of the average emoluments and equal period before the ten months shall be included.
Note-3: In the case of a Government servant who was on earned leave during the last ten months of his service and earned an increment, which was not withheld, such increment though not actually drawn shall be included in the average emoluments provided that the increment was earned during the currency of the earned leave not exceeding one hundred and twenty days or during the first one hundred and twenty days of earned leave where such leave was for more than one hundred and twenty days.
Determination of the period of ten months for Average Emoluments. -In accordance with item 18 (i) of Form 7 (Form for assessing pension and gratuity) and note (ii) under item (19) of Part I, Section I of Form 18, of the CCS (Pension) Rules, 1972, the calculation of average emoluments is to be based on the actual number of days contained in each month. Doubts have been expressed in regard to the exact manner of calculation in the case of a Government servant who retires on a date other than the last date of the month. A point has also been raised whether the period of ten months should be taken to be continuous period beginning from a date ten months prior to the date of retirement or the number of days in the month in which the Government servant retires should be counted separately together with the balance number of days during the ten months anterior, to make a full month. This can best be explained by the illustration below –
Suppose a Government servant retires on the 17th June, 2018. The intention is that the average emoluments for ten months should be reckoned for the periods as follows:-
|18-8-2018 to 31-8-018||—||
|1-9-2018 to 31-5-2018||—||
|1-6-2018 to 16-6-2018||—||
It will be noted that at one end there are 14 days of August and at the other 16 days of June. In order that the fractions of a month at either end, when added, work out to one full month, a month for this purpose may be reckoned as consisting of thirty days so that fractions at either end will be expressed as 14/30 and 16/30. The addition of fractions totalling 30 days together with 9 full months will work out to 10 months. Emoluments for fractional periods may be computed by multiplying the emoluments by the factor 14/30 and 16/30 irrespective of the number of days in the month. This formula will also apply in the case of the month of February, irrespective of whether the month has 28 days or 29 days.
The minimum eligibility period for receipt of pension is 10 years. A Central Government servant retiring in accordance with the Pension Rules is entitled to receive superannuation pension on completion of at least 10 years of qualifying service.
In the case of Family Pension the widow is eligible to receive pension on death of her spouse after completion of one year of continuous service or before even completion of one year if the Government servant had been examined by the appropriate Medical Authority and declared fit for Government service.
W.e.f 1.1.2006, Pension is calculated with reference to average emoluments namely, the average of the basic pay drawn during the last 10 months of the service or last basic pay drawn whichever is beneficial. Full pension with 20 years of qualifying service (10 years in special cases) is 50% of the average emoluments or last basic pay drawn whichever is beneficial.
Minimum pension presently is Rs. 3500 per month. Maximum limit on pension is 50% of the highest pay in the Government of India (presently Rs. 45,000) per month. Pension is payable up to and including the date of death.
Commutation of Pension
A Central Government servant has an option to commute a portion of pension, not exceeding 40% of it, into a lump sum payment with effect from 1.1.1996. No medical examination is required if the option is exercised within one year of retirement. If the option is exercised after expiry of one year, he/she will have to under go medical examination by the specified competent authority.
Lump sum payable is calculated with reference to the Commutation Table constructed on an actuarial basis. The monthly pension will stand reduced by the portion commuted and the commuted portion will be restored on the expiry of 15 years from the date of receipt of the commuted value of pension. Dearness Relief, however, will continue to be calculated on the basis of the original pension (i.e. without reduction of commuted portion).
The formula for arriving for commuted value of Pension (CVP) is
CVP = 40 % (X) Commutation factor* (X)12
This is payable to the retiring Government servant. A minimum of 5 years qualifying service and eligibility to receive service gratuity/pension is essential to get this one time lump sum benefit. Retirement gratuity is calculated @ 1/4th of a month’s Basic Pay plus Dearness Allowance drawn before retirement for each completed six monthly period of qualifying service. There is no minimum limit for the amount of gratuity. The retirement gratuity payable is 16½ times the Basic Pay, subject to a maximum of Rs. 20 lakhs.
This is a one-time lump sum benefit payable to the widow/widower or the nominee of a permanent or a quasi-permanent or a temporary Government servant, including CPF beneficiaries, dying in harness. There is no stipulation in regard to any minimum length of service rendered by the deceased employee. Entitlement of death gratuity is regulated as under:
|Less than one year||2 times of basic pay|
|One year or more but less than 5 years||6 times of basic pay|
|5 years or more but less than 20 years||12 times of basic pay|
|20 years of more||Half of emoluments for every completed 6 monthly period of qualifying service subject to a maximum of 33 times of emoluments.|
Maximum amount of Death Gratuity admissible is Rs. 20 lakhs w.e.f. 1.1.2016
A retiring Government servant will be entitled to receive service gratuity (and not pension) if total qualifying service is less than 10 years. Admissible amount is half month’s basic pay last drawn for each completed 6 monthly period of qualifying service. There is no minimum or maximum monetary limit on the quantum. This one time lump sum payment is distinct from and is paid over and above the retirement gratuity.
General Provident Fund and Incentives (For employees joined Government Service before 1.1.2004)
As per General Provident Fund (Central Services) Rules, 1960, all temporary Government servants after a continuous service of one year, all re-employed pensioners (Other than those eligible for admission to the Contributory Provident Fund) and all permanent Government servants are eligible to subscribe to the Fund. A subscriber, at the time of joining the fund is required to make a nomination, in the prescribed form, conferring on one or more persons the right to receive the amount that may stand to his credit in the fund in the event of his death, before that amount has become payable or having become payable has not been paid. A subscriber shall subscribe monthly to the Fund except during the period when he is under suspension. Subscriptions to the Provident Fund are stopped 3 months prior to the date of superannuation. Rates of subscription shall not be less than 6% of subscriber’s emoluments and not more than his total emoluments. Rate of interest on GPF accumulations with effect from 1.4.2009 is 8% compounded annually and the rate of interest will vary according to notifications of the Government. The Rules provide for drawal of advances/ withdrawals from the Fund for specific purposes.
Deposit Linked Insurance Revised Scheme
Under the GPF Rules, on the death of subscriber, the person entitled to receive the amount standing to the credit of the subscriber shall be paid an additional amount equal to the average balance in the account during the 3 years immediately preceding the death of the subscriber subject to certain conditions provided in the relevant Rule. The additional amount payable under that Rule shall not exceed Rs. 60,000/-. To get this benefit, the subscriber should have put in at least 5 years service at the time of his/her death.
Contributory Provident Fund
The Contributory Provident Fund Rules (India), ,1962 are applicable to every non-pensionable servant of the Government belonging to any of the services under the control of the President. A subscriber, at the time of joining the Fund is required to make a nomination in the prescribed Form conferring on one or more persons the right to receive the amount that may stand to his credit in the Fund in the event of his death, before that amount has become payable or having become payable has not been paid.
A subscriber shall subscribe monthly to the Fund when on duty or Foreign Service but not during the period of suspension. Rates of subscription shall not be less than 10% of the emoluments and not more than his emoluments. The employer’s contribution at that percentage prescribed by the Government will be credited to the subscriber’s account and this is 10%. Rate of interest with effect from 1.4.2009 is 8% compounded annually. The Rules provide for drawal of advances/ withdrawals from the CPF for specific purposes. As in GPF Rules, the CPF Rules also provide for Deposit Linked Insurance Revised Scheme.
Encashment of leave is a benefit granted under the CCS (Leave) Rules and not a pensionary benefit. Encashment of Earned Leave/Half Pay Leave standing at the credit of the retiring Government servant is admissible on the date of retirement subject to a maximum of 300 days. There is no provision under the Rule for payment of interest on delayed payment of Leave Encashment.
Central Government Employees Group Insurance Scheme
A portion of monthly contributions paid while in service is credited in a Saving Fund, on which interest accrues. A Government servant while entering service has to apply in Form No. 4 of the above Scheme to the Head of Office, who shall issue a sanction for the payment of subscriber’s accumulation in the Savings Fund segment together with interest and arrange for its disbursement, soon after retirement. Payments under this Scheme are made in accordance with the Table of Benefit which takes in to account interest up to the date of cessation of service. Insurance cover benefit under this Scheme is available to the family in the event of death of the subscriber. No interest is payable on account of delayed payments under this Scheme.