Pension benefi ts 7 A government servant would be entitled for full pension up on completion of 33 years of qualifying service. Such pension would be reduced pro rata in cases in which the qualifying service is less than 33 years. The minimum amount of pension is fi xed at INR 1275 per month (raised from INR 375 per month after 1 January 1996) and is subject to a maximum of INR 15 000 per month (raised from INR 4500 per month after 1 January 1996) with a qualifying service of 33 years or more. The maximum and minimum limits were raised by 50 per cent on account of a merger of Dearness Relief equal to 50 per cent of pension as Dearness Pension in 2004. This benefi t in the form of a family pension is extended to the spouse after the death of the government servant after completing 1 year of the government service or even before 1 year, if the government servant was declared medically fi t at the time of entry into the government service. The family pension scheme was introduced with effect from 1 January 1964. It is provided at a uniform rate of 30 per cent of the basic pay subject to a minimum of INR 1275 per month (raised from INR 375 per month after 1 January 1996) to a maximum of INR 9000 per month (raised from INR 1250 per month after 1 January 1996). In addition, the family pension calculation from 1 January 1996 is made at a uniform rate of 30 per cent of basic pay instead of the slab system prevailing until then.

Commutation of pension Government servants have a facility to commute a portion of their pension into a lump sum payment. Although this proportion has undergone some changes in the past, with effect from the Fifth Pay Commission, that is, 1 January 1996, this facility is extended to 40 per cent of pension. 8,9 The maximum amount of pension admissible for commutation before 1 January 1996 was one-third of the basic pension. The monthly pension drawn for 15 years after the availment of commutation would be reduced by the portion commuted to be restored after 15 years. The restoration of the commuted amount of pension introduced on 1 April 1986 was based on a judgment passed by the Supreme Court until which period commutation was never restored. Dearness Relief, however, is provided for the entire pension amount

Gratuity Death-cum-retirement gratuity is admissible to a permanent government servant on his retirement, or is paid to his family in the event of his death while in service. This has been treated under two separate titles since 1 January 1986, ‘ retirement gratuity ’payable to the employee on his retirement and ‘ death gratuity ’payable to the family on his death while in service. Retirement gratuity is admissible if the qualifying service is not less than 5 years. The amount is equal to one-fourth of his emoluments for each completed 6-month period of qualifying service, subject to a maximum of INR 3.5 lakhs; this is an enhanced amount from INR 2.5 lakhs (for retirements on or after 1 January 1996). 6 The following section of this paper presents the trends in pension payments in India and their analysis.