Pension Forfeiture for PSU Dismissals Under New CCS Rules 2025

In a significant development impacting retired and serving employees absorbed in Public Sector Undertakings (PSUs), the Department of Pension & Pensioners’ Welfare under the Ministry of Personnel, Public Grievances and Pensions has notified an important amendment to the Central Civil Services (Pension) Rules, 2021. The notification, published in the Gazette of India on May 23, 2025, introduces a stricter provision under Rule 37(29)(c) of the CCS Pension Rules, aimed at curbing post-absorption misconduct.

What Has Changed?

The amendment clarifies and tightens the consequences for PSU employees who were earlier in government service and subsequently got absorbed into a PSU:

If such an employee is dismissed, removed, or retrenched from the PSU for any subsequent misconduct, their entire pensionary benefits for the past government service may also be forfeited.
Additionally, such punitive actions taken by the PSU will now be subject to review by the administrative ministry concerned with the PSU.

This is a marked shift from earlier interpretations where pension benefits accrued during government service were generally considered protected even after absorption.

The revised clause also makes it clear that in such cases, the disciplinary rules that apply to government servants, namely Rules 7, 8, 41, and Rule 44(5), will apply analogously to these employees. This ensures that procedures for review and appeals mirror those available to regular government servants, bringing parity in accountability mechanisms.

View Gazette Notfn