Retirement Benefits

Absorption in PSU & Pension

Government of India
Ministry of Personnel,
Public Grievances & Pensions
Department of Pension & Pensioners’ Welfare

Date: 30th September, 1996


Restoration of one-third commuted portion of pension after 15 years from the date of commutation in respect of the Government servants who had drawn lumpsum amount on their absorption in a Public Sector Undertaking/Autonomous Body – implementation of the Judgement of the Supreme Court -

The undersigned is directed to say that in accordance with the provisions of this Department’s O.M. No.34/2/86-P&PW dated 5th March 87, Central Government pensioners who have commuted a portion of their pension are entitled to the restoration of the commuted portion of pension on the expiry of 15 years from the date of commutation. These orders were issued as a result of the Supreme Court Judgement dated 9.12.86 in Writ Petition No.3958-61 of 1983 viz. "Common Cause" case. Para 4 of the said O.M. stipulates that Central Government Employees who got themselves absorbed under Central Public Sector Undertakings/Autonomous Bodies and received/or opted to receive commuted value of 1/3rd of pension as well as terminal benefits equal to the commuted value of the balance amount of pension left after commuting 1/3rd of pension would not be entitled to any benefit under these orders as they ceased to be Central Government pensioners.

2. The Supreme Court of India in its Judgement dated 15.12.95 in Writ Petition (C) No. 11855/85 while quashing para 4 of the O.M. dated 5.3.87 ibid. have ruled that the petitioners who had commuted full pension are also entitled to the benefit as given by Supreme Court of India in the "Common Cause" case so far as it related to restoration of 1/3rd of the commuted pension.

3. The question regarding implementation of the Supreme Court Judgement has been under consideration of the Government. The President has now been pleased to decide that para 4 of the O.M. dated 5th March, 1987 shall be deemed to have been deleted. Accordingly, the benefit of the restoration of commuted pension shall be admissible to all those Government servants who had been absorbed in Public Sector Undertakings/Autonomous/Statutory Bodies notwithstanding the fact that having commuted the full pension they were not in receipt of any monthly pension.

4. The Armed Forces Personnel including officers under their Service Regulations are entitled to commutation of 45%/43% of their pension on their retirement in normal cases instead of 1/3rd commutation of pension that is admissible in the case of civilian Government servants. Accordingly, the Armed Forces Personnel who had commuted full pension shall be entitled to the restoration of 45% of their pension and the officers in the Armed Forces shall be entitled to the restoration of 43% of their pension in accordance with the above procedure.

5. All the concerned Central Government absorbees in a PSU/Autonomous Body etc. shall have to formally apply to the respective administrative Ministry/Department/Office from where they had retired and were paid lumpsum commuted value of pension for the purpose of getting benefit of this O.M.

6. Since no PPO had been issued in their case as they had drawn lumpsum payment and were not entitled to the drawal of monthly pension, the concerned Administrative Ministry/ Department/Office shall, after verification of the claims from the relevant records, issue suitable instructions to their Pay and Accounts Officer for issue of PPOs through the normal channel viz., the Central Pension Accounting Office.

7. In cases where the absorbee Government servant had completed 15 years from the date of commutation on 1.4.85 or thereafter and had died subsequently, his/her legal heir(s) is/are entitled to receive arrears w.e.f. 1.4.85 or from the date of completion of 15 years from the date of commutation, whichever is later, till the date of the absorbee’s death. For this purpose, legal heir(s) shall have to apply to the concerned administrative Ministry/Department/Office from where the absorbee had retired for settlement of the case.

8. Administrative Ministries/Departments are also requested to note that restoration of 1/3rd commuted portion of pension in the case of absorbees would not make the family member(s) of the absorbee eligible to claim family pension from the Central Government because the entitlement to family pension on absorption of a Government servant is governed by a separate set of instructions on the subject. It is therefore to be ensured by the Administrative Ministries/Departments etc. that no mention about payment of family pension from the Central Government in respect of family member(s) of an absorbee should be made in the PPO.

9. This issues with the concurrence of the Ministry of Finance (Department of Expenditure) vide their U.O.No.878/EV/96 dated 30.9.1996.

10. Hindi version of this O.M. is also enclosed.


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