Indian Administrative Service (IAS) Officer : Pension, Gratuity, Allocation and New Pension Scheme

Indian Administrative Service (IAS) Officer : Pension, Gratuity, Allocation and New Pension Scheme

Lakhs of young aspirants in the country aspire to become an IAS officer. IAS officers are in a different league compared to other professionals (public and private) considering the benefits they enjoy. A lot of candidates are curious to know the Civil Services IAS Officer Pension details.

After the 7th Pay Commission, IAS Officers get salaries almost equal to the private sector’s pay scale. Also, suppose one is wondering, “Apart from the salary, what are the perks of an IAS Officer?” In that case, they are granted several perks that a private-firm professional can never dream of having. 

Most importantly, IAS officers enjoy immense power bestowed on them by the Government. They can improve their living conditions for the better (as well as the country’s people’s lives and not just their own family).

The retired life of an IAS, IPS, IRS, etc. is usually quite comfortable. They get pension after their retirement, which is 50% of their last pay drawn. While the pension is not fixed, they do get Dearness Allowance (DA) every six months. Hence, they usually get a jump of around 10% of their pensions every year.

Even after the death of the government official, the spouse is entitled to 50% of the pension throughout her life. This pension is increased after they attain the age of 80/90 years. The retired officers are also entitled to free medical facilities for himself and his family throughout their life.

The officer loses all their powers on their retirement. However, they are often re-employed by the Government. For example, the current PS of PM Mr. Nripendra Misra is a retired IAS officer and Mr. Ajit Doval, the National Security Adviser, is a retired IPS officer. 

The current Central Vigilance Commissioner is a retired IRS officer. The retired officers are also appointed in GAG, CVC, CEC, and even posted as Governors and other essential positions.

The retired IRS officers are often employed in Tax Appellate Tribunals, Settlement Commission, Advance Ruling Authority, and many similar assignments. They also can join a top tax consultancy company in India or be appointed as CFO or Head of the Tax Division in large companies.

Note: The benefits of pensions are presently not available to the new entrants. Other benefits like health are still available.

IAS Officer Pension

The minimum eligibility for receipt of a pension is ten years. A Central Government servant retiring following the Pension Rules is entitled to receive pension on completion of at least ten years of qualifying the service.

In the case of the Family Pension, the widow is eligible to receive the family pension on the death of her spouse after completion of one year of continuous service or even before the end of one year if the Government servant had been examined by the appropriate Medical Authority and declared fit for the Government service.

The pension is calculated concerning payments (i.e., last basic pay) or average emoluments (i.e., an average of the basic pay drawn during the last ten months of the service) whichever is more beneficial as per the rules and requirements. The amount of a pension is 50% of the emoluments or average emoluments, whichever is beneficial.

Presently, the minimum pension is Rs. 9000 per month. The maximum pension limit is 50% of the highest pay in India’s Government (currently Rs. 1,25,000) per month. The pension is payable up to and including till the date of death of an aspirant.

Commutation of Pension

The Central Government servants have options to commute a portion of pension, not exceeding 40% of it, into a lump sum payment for future use. No medical examination is required if the option is exercised within one year of their retirement. If the option is used after the expiry of one year, he/she will have to undergo medical examination by the specified competent authority.

Lump-sum payable is calculated concerning the Commutation Table. 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 a pension. Dearness Relief, however, will continue to be calculated based on the original allowance (i.e., without reduction of commuted portion).

The formula for arriving for the commuted value of a Pension (CVP) is as follows:

CVP = 40 % (X) Commutation factor * (X) 12

The commutation factor will be concerning age next birthday on which the commutation becomes an absolute as per the New Table annexed to the CCS (Commutation of Pension) Rules, 1981.

Death/Retirement Gratuity

Retirement Gratuity

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 on the date of retirement for each completed six monthly periods of qualifying service. 

There is no minimum limit for the amount of gratuity. The retirement gratuity payable for qualifying service of 33 years or more is 16 times the Basic Pay plus DA, subject to a maximum of Rs. 20 lakhs.

Death Gratuity

This is a one-time lump sum benefit payable to the nominee or family member of a Government servant dying in harness. There is no stipulation concerning any minimum length of service rendered by the deceased employee. Entitlement of death gratuity is regulated as under:

Qualifying Service Rate:

  • Less than one year – 2 times of basic pay
  • One year or more but less than five years – 6 times of basic pay
  • Five years or more but less than 11 years – 12 times of basic pay
  • 11 years or more but less than 20 years – 20 times of basic pay
  • Twenty years or more – Half of the payments for every completed six monthly periods of qualifying service subject to a maximum of 33 times of emoluments.

The maximum amount of Death Gratuity admissible is Rs. 20 lakhs w.e.f. 1.1.2016.

Service Gratuity

A retiring Government servant will be entitled to receive service gratuity (and not pension) if the total qualifying service is less than ten years. Admissible amount is half month’s basic pay last drawn plus DA for each completed six monthly periods of qualifying service. This one-time lump sum payment is distinct from retirement gratuity and is paid over and above the retirement gratuity.

Issue of No Demand Certificate

Dues owed by the retiring employees on account of License Fee for Government accommodation, advances, over payment of pay and allowances are required to be assessed by the Head of Office and intimated to the Accounts Officer two months in advance of the date of retirement so that these are recovered from retirement gratuity before payment.

For this purpose, the License Fee for those in the occupation of Government accommodation is considered to the end of the permissible period for which housing can be retained after retirement under the Rules on average rent. The recovery of the License Fee beyond that period is the responsibility of the Directorate of Estates. 

Suppose for any reason, and final dues cannot be assessed on time. In that case, 10% of gratuity is withheld from gratuity based on a commutation from the Directorate of Estates in this regard.

New IAS Officer Pension Scheme

The pension facility for all government employees (except armed forces) has been revamped from 1 Jan 2004. So, IAS officers and other government employees joining after 1 Jan 2004 must contribute 10% of their salary for the pension, and the Govt adds 14% towards it.

There is also NPS, which can never match the old pension scheme. But IAS are gazetted officers, and they are the ones who make most of the policies. We guess they can restart for IAS and other government employees because they frame the administration policies. Let’s hope they restart it for themselves and others.

Summary

Although IAS officers are given important powers during their tenure, they all lose it upon retirement. One thing is for sure though, that upon retirement, a Civil Servant’s life and living conditions will still be comfortable thanks to the pension scheme set up by the government.

In this article, we find out about the old and new schemes of IAS Officer pension. We also highlight the added benefits a retired Civil Servant and his/her family will get upon retirement, as well as how the pension and service gratuity is computed.

Areas covered in this article

  • What are the retirement benefits of an IAS officer
  • IAS officer pension computation

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This post was last updated on September 28th, 2021 at 02:43 pm

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