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What Retirement Benefits Do Central Government Employees Receive?

Central government employees receive various retirement benefits for financial security, from monthly pensions to healthcare. Learn more

Outlook Money
December 1, 2023
Retirement Benefits

Retirement Benefits

Retirement Benefits for Government Employees include monthly pensions, death benefits, and insurance coverage for themselves and their families. These benefits are in addition to voluntary contributions they may have made to other retirement plans available in the market. The following are some benefits that central government employees receive from their employers after retirement.


The central government employees who complete ten years of service become eligible for monthly pensions. The pension amount is calculated based on the employee’s last drawn salary or the average of the previous 10 months’ wages. The amount can range from a minimum of Rs. 9,000 a month to 50 percent of the highest pay in a central government job, which is Rs. 1.25 lakh per month, as per the The monthly pension continues until the death of the pensioner. The pensioner’s widow can also claim pensions if the spouse dies after one year of service or before it.

Lump Sum Payment

A central government employee can convert a portion of their pension, up to 40 percent, into a lump sum payment. No medical examination is necessary if the option is exercised within a year of retirement. If exercised after a year, they must undergo a medical examination by a competent body. The withdrawal amount is proportionately deducted from the monthly pensions until 15 years, after which the original computed amount is restored.

General Provident Fund

Temporary employees who have completed one year of continuous service or are re-employed or all permanent government employees are eligible to subscribe to this fund under the General Provident Fund (Central Service) Rules, 1960. Every subscriber at the time of joining the fund is required to make a nomination conferring on one or more people to receive the amount on their behalf in the event of their death.

The contribution should not be less than 6 percent of their monthly income, and they are to contribute each month to the fund except during a “suspension”. The contributions must stop three months before the date of superannuation. The conditions for withdrawals are lenient. After the subscriber’s retirement, instructions are provided for quick payment of the final sum. The subscriber is also not obliged to apply for a final payment from the fund.

Deposit-Linked Insurance Scheme

Under the GPF rules, the nominee can also receive the outstanding pension amount three years preceding the subscriber’s death, subject to certain conditions. If the subscriber has

completed five continuous years of service at the time of death, the nominee receives an additional amount not exceeding Rs 60,000.

Contributory Provident Fund

The Contributory Provident Fund Rules (India), 1962, apply to all non-pensionable government employees in any services under the president’s jurisdiction. It has many similarities to GPF as CPF also requires a nomination to receive the money on behalf of the subscriber in the event of death and a deposit-linked insurance scheme.

The contributions should not be less than 10 percent of the monthly income, matched by another 10 percent from the employer. They are to contribute to the fund each month except in a suspension situation.

Retirement Gratuity

The employee is eligible for gratuity if they have completed five years of service and the amount is paid in a lump sum. The gratuity amount is calculated at one-fourth of a month’s basic pay plus dearness allowance drawn on the retirement date for each completed six months of service. There is no minimum limit for the gratuity amount.

Death Gratuity

It is a one-time lump sum benefit provided to the employee nominee. There is no stipulation regarding the service period of the deceased employee. For instance, if the service period is less than a year, the amount will be two times the basic pay. If it is five years or more but less than 11 years, then it is 12 times the basic pay, and if it is 11 years or more but less than 20 years, it will be 20 times the basic pay.

Central Government Employees Group Insurance Scheme

A portion of monthly contributions is credited to a savings fund, which earns interest. Payments under this scheme are made per the “table of benefits” issued by the expenditure department, including interest accrued up to the service discontinuation date. The insurance coverage extends to the family in the case of the subscriber’s death.

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