Settlement of Retirement Benefits to Railway Employees – Procedure

Settlement of Retirement Benefits to Railway Employees – Procedure to be followed and Formalities to be observed and withholding of pensionary benefits

1.         What formalities are observed for initiating settlement cases?

The mandatory requirement of the Pension Rules is that the payment of pension and Gratuity should in all cases commence on the first day of the month in which they are due. The Railway Administration is, therefore, solely responsible to ensure the compliance with this mandatory provision. For this purpose, Head of Office and others responsible or connected with processing of Pension cases, are required to observe a set time schedule, for the various processes. The preliminary and preparatory work should, therefore, be commenced sufficiently in advance and adequate time allowed for the various stages and processes of work. For this purpose a Time Schedule containing firm cut-off dates has been prescribed for each stage, such that when a cut-off date is reached, the work then necessarily proceeds to the next stage.

2.         What action is required to be observed to initiate ‘Normal Retirement Settlement’ cases?

Normal Retirement Settlement cases are initiated in three stages:

First Stage

(i) As per rule 76 of Railway Service (Pension) Rules, 1993, in every six months, i.e. on 1st January and 1st July each year, a list of all Railway Servants who are due to retire within the next twenty four to thirty months of that date will be published.

(ii) The administration will initiate the pension case two years before the date of retirement of a Railway Servant. At this stage, the work will be essentially that of scrutiny of Service Record/ Leave Account and to get them completed in all respects, with a view to assessing total qualifying service and at a later date, the calculation of average emoluments. This process should be completed in good time and at any rate not later than 8 months in advance of the date of retirement of the employee concerned.

(iii) Rectifying any deficiencies, imperfections of omission in Service Record.

(iv) Recording of certificate of verification of Service in the Service Record.

Second Stage

(i) At this stage, the process of determining the emoluments should be initiated and completed. The qualifying service should be determined on the basis of entries in the Service Record.

(ii) The average emoluments should be determined with reference to the emoluments drawn during the last 10 months. The work involves not merely an arithmetical calculation but also a check of the correctness of emoluments, correctness of emoluments on the first date of the ten months period depends on the correctness of emoluments prior to this date for which a check of correctness should be carried out.

(iii) The process of determining the qualifying service and the average emoluments and the admissible pension and Gratuity should be positively completed with in a period of two months and the pension papers sent to Accounts for issuing PPO.

Third Stage

The Accounts Office on receipt of the pension papers will scrutinize the papers and after necessary scrutiny will issue Pension Payment Order (PPO) including the order for the Payment of the DCRG not later than one month in advance of date of retirement.

To observe and complete the necessary formalities to process the settlement cases at various stages, the time schedule is as under:


Various Stages

Time by which work is to be completed before retirement


Preparation and publication of list of staff retiring in next two years 1 year


Service Record and Leave Account to be completed by the concerned Section 6 months


Check of Leave Account by leave Inspector or S&WI or nominated Superintendent of Section 5 months


Getting verification of Service Record and Leave Account completed from Accounts 4 months


Time by which Service Record and Leave Account should go to Settlement Section after Account’s verification 4 months


To get settlement forms filled from concerned staff 4 months


Getting ‘No Demand Certificate’ 3 months


Sending settlement papers to Accounts Latest 2 months


Time by which PF/PPO to be passed and issued by Accounts Not later 1 one month in advance


Encashment of leave papers completed and bills sent to Accounts 20 days


Time by which leave encashment, commutation and other settlement dues to be passed and payment arranged Last working day of retirement

3.         What action is required to be observed to initiate ‘Other than Normal Retirement Settlement’ cases?

‘Other than Normal Retirement’ cases pertain to death cases wherein special attention is paid to ensure quick payment to the bereaved family. To facilitate swift action, the following guidelines are laid down:

(i) When an employee dies, while in service, the concerned supervisory official should immediately report the matter to Sr.DPO/DPO and the Sectional Staff & Welfare Inspector.

(ii) The Sectional Staff &Welfare Inspector should immediately contact the family members of the deceased employee and provide every possible assistance in obtaining Death Certificate, filling up of settlement forms and submit them to the Settlement Section.

(iii) The Staff & Welfare Inspector should also obtain necessary application forms for employment on Compassionate Ground, duly completed in all respects and submit the same in the office along with his Enquiry Report.

(iv) Immediately on receipt of death information, Sr.DPO/DPO should instruct the Settlement Section staff to enter the name of the deceased in the Register maintained for the purpose and also to give information to the Accounts so that they can bring the PF Account with interest up to date.

(v) As the family of the deceased employee is suddenly deprived of the steady monthly income, the Insurance payment should be arranged immediately, as calculation for the same is very simple. In the meanwhile, Service Record, Leave Account etc. should be completed. Similarly, the Accounts Officer to whom the death intimation had already been given, should calculate the PF amount due, interest due etc. and keep the amount ready for payment.

(vi) As soon as all the settlement forms are duly filled and submitted by the widow/family members of the deceased employee, payment of necessary settlement dues should be arranged.


1.         Why Pensionary Benefits are withheld?

Earlier, for the grant of full pensionary benefits, service being ‘thoroughly satisfactory’ was the pre-condition. However, as a result of deletion of this provision, DCRG/Pension cannot ordinarily be withheld now. Withholding of Pension can be done with the sanction of the President, who reserves to himself, for withholding or withdrawing a Pension or DCRG or both; whether permanently or for a specified period, if in a departmental or judicial proceeding the Railway Servant is found guilty of grave misconduct or negligence, during the period of service, subject to the fulfillment of the following conditions:

(i)         Such departmental proceedings, if instituted while the Railway Servant was in service before his retirement shall, after the final retirement, be deemed to be proceedings and shall be continued and concluded in the same manner as if the Railway Servant had continued in service.

(ii)        Such proceedings, if not instituted while the Railway Servant was in service before retirement:
(a) Shall not be instituted, save with the sanction of the President.

(b) Shall not be in respect of any event which took place more than 4 years before such institution.
(iii)       No such judicial proceedings, if not instituted while the Railway Servant was in service before his retirement, shall be instituted in respect of a cause of action which arose or an event which took place more than 4 years before such institution.

2.         In which cases Government dues can be recovered from pensionary benefits?

A claim against a Railway Servant may be on account of one or the other of the following:

(i) Losses (including short collection in freight charges, shortage in Stores) caused to the Government, as a result of negligence or fraud on the part of the Railway Servant while he was in service.

(ii) Other Government dues such as overpayment on account of pay and allowances or admitted and obvious dues such as house rent, Post Office, Life Insurance premium, outstanding advances etc.

Recovery in respect of items (i) and (ii) above can be made from DCRG whereas the dues as mentioned in item (c) above, such as amount payable by a Railway Servant to Consumer Co-operative Society/Consumer Credit Society or the dues payable to autonomous organizations by a Railway Servant, may be recovered from the DCRG provided he gives his consent for doing so in writing to the administration.

If all the above mentioned government dues cannot be recovered from DCRG, then they can be recovered from the Dearness Relief on the Pension, as per Rule 16 (4) of Railway Servant Pension Manual.

Efforts should be made to assess and adjust the recoverable dues before the superannuation of the employee. In any case, it would be presumed that there is no claim against the Railway Servant if none is made after his retirement, within the period indicated below:

(i) 15 months, if commercial debits are involved.

(ii) 6 months, if commercial debits are not involved.

To reduce the above mentioned limit, the Board have issued various instructions from time to time.

3.         Which pensionary benefits are withheld on retention/unauthorized retention of Railway accommodation?

In respect of recovery on account of rent for Railway accommodation, it is in the own interest of the employee to vacate the Railway accommodation immediately after retirement or within the permissible period, in order to get early payment of DCRG. To discourage the unauthorized retention of Railway accommodation, it has been decided to take the following steps:

(i) ‘No Claim Certificate’ should not be issued unless the employee after retirement has vacated the Railway quarter and cleared all his arrears of rent, lawn, water, electricity and other charges etc.

(ii) DCRG will be withheld in full and will not be released till the Railway Accommodation is vacated and all the arrears of rent are finally adjusted.

(iii) For every month of unauthorized retention of Railway quarters, one set of post retirement passes should be disallowed by giving a show-cause notice before disallowing the pass.

Check links below for more details on each of Retirement Benefit applicable to Railway Employees

    Source: Indian Railways

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