Finance Department

Pensions and Other Retirement Benefits

Policy Note -  2003 - 2004

Demand No. 48

1. 1.  The first major component of the expenditure under this demand relates to pension and pensionary benefits of Government employees and teaching and non-teaching staff in Aided Educational institutions.  This demand also covers the expenditure on pension and other benefits granted to freedom fighters and Ex-INA personnel.  There are about 4,79,233 pensioners and family pensioners in this state as on 31.12.2002. The details of pensioners and family pensioners in the State are given below:

2. This Demand comprises the following major heads: 

PENSION AND OTHER BENEFITS TO GOVERNMENT EMPLOYEES AND TEACHING AND NON-TEACHING STAFF OF AIDED EDUCATIONAL INSTITUTIONS.

3. The Expenditure on Pension and Retirement Benefits over the past has been as follows:

It may be seen that the Percentage share of Pension and Retirement Benefits has gone up substantially.  In view of the very sharp increase some measures to control the growth of Pensions and Retirement Benefits have become necessary.

4. PENSION :

A minimum qualifying service of 10 years is necessary for eligibility for pension.  For those retiring on or after 1.4.2003 pension is calculated based on the average emoluments, drawn during the last 10 months of service.  Full pension is admissible for a maximum qualifying service of 33 years and proportionate pension is paid for a qualifying service of less than 33 years with effect from 1.4.2003.   The Government has issued orders revising pension/family pension with effect from 1.1.96 as granted to Central Government pensioners/family pensioners.  Minimum pension has been enhanced from Rs.375/- to Rs.1275/- per month with effect from 1.1.1996.

5. GRATUITIES:

(i) Service Gratuity : 

Service gratuity is admissible for those who have put in less than 10 years of qualifying service.  It is calculated at the uniform rate of half a month’s emoluments for every completed six monthly period  of service.  This is a one time lumpsum payment for the service rendered in addition to the retirement gratuity admissible. 

(ii) Death Gratuity :

In the event of death in harness, death gratuity is admissible at the following rates:-

iii) Retirement Gratuity :

One who has completed five years of qualifying service and above is granted retirement gratuity on his retirement at the rate of 1/4th of emoluments for each completed six monthly period of qualifying service subject to a maximum of 16 1/2 times of monthly emoluments.  The Government has issued orders enhancing the maximum of retirement gratuity from Rs.2.50 lakhs to 3.50 lakhs with effect from 1.1.1996.  The Government has also issued orders that the calculation of gratuity will be based on pay and dearness allowance last drawn in respect of the employees retiring on or after 1.4.1998.  For persons retiring on or after 1.4.2003 payment of gratuity at the time of retirement shall be made 50% in cash and the balance 50% in Small Savings Certificate.

6. FAMILY PENSION :

The family of a Government servant is eligible for family pension in the event of his death either in service or after retirement.  In the case of death while in service, one year continuous service in a pensionable post at any time during his service is required to become eligible for family pension.  Family pension is also allowed to the family of Government Servants who die in harness before completion of one year continuous service provided that the deceased Government servant concerned immediately prior to his appointment to the service or post was examined by a medical authority and declared fit for Government service.  In the case of death after retirement, one should be a pensioner at the time of death to become eligible for family pension.  However, minimum family pension is allowed in cases of death after retirement to those who had put in less than 10 years of service and otherwise not eligible for pension.

The Government has issued orders enhancing the minimum family pension from Rs.375/- to Rs.1275/- per month. The maximum family pension will be 30% of the maximum of the highest pay scale.

Family pension is payable to the widow/ widower till her/his remarriage or death whichever is earlier.  After her/his death, it is payable to the children upto the age of 25 years. However, if the son/unmarried daughter is suffering  from  any  disorder or disability of mind or physically crippled or disabled so as to render him/her unable to earn a living even after  attaining the age of 25 years, the family pension shall be payable to such son/daughter for his/her life time.

7. EX-GRATIA PAYMENT :

Government has issued orders enhancing  ex-gratia payment from  Rs.150 per month to Rs.605/- per month with Dearness Allowance of Rs.31/-with effect from 1st November 1997 to the families of deceased Contributory Provident Fund / Non-Pensionable establishment beneficiaries of State Government and the employees of former District Board who had retired / died in harness prior to 1st January 1986 and who are not eligible for family pension.  They are also eligible for the increase in Dearness Allowance sanctioned by the Government from Ist January 1998 onwards.

8. COMMUTATION OF PENSION :

Pensioners are eligible to commute a portion of pension into a lumpsum payment.  This commutation of pension is authorised by the Accountant-General without medical examination if they apply for the same within one year from the date of issue of Pension Payment Order.  This concession has been extended in the case of voluntary retirement also.  The Government has also allowed restoration of the commuted portion of pension after 15 years from the date of retirement in cases where commutation of pension is simultaneous with retirement or 15 years from the date of commutation where commutation of pension is done in the second or subsequent months of retirement.  The Government has issued orders permitting commutation upto 33 1/3% of pension for those retiring on or after 1.4.2003.  Orders have also been issued on the revised commutation table to take effect from 1.4.2003 based on an interest rate of 8%.

9. OTHER RETIREMENT BENEFITS :

1. i)  Encashment of earned leave at credit at the time of retirement upto a maximum of 240 days is allowed.
2. ii) From 1.4.2003 onwards Encashment of 50 percent of the leave on private affairs standing to their credit at the time of retirement upto a maximum of 60 days is also allowed.
3. iii) Pay plus Dearness Allowance alone is allowed for encashment of earned leave and unearned leave on private affairs for persons retiring on or after 1.4.2003.
4. iv)  Transfer Travelling Allowance is allowed  for going to the native place or to the place wherever  retired employee wishes to settle down after retirement. 

10. OTHER BENEFITS TO PENSIONERS:

A. Dearness Allowance:

1. i)  Dearness Allowance to Pensioners / Family Pensioners is being sanctioned whenever it is sanctioned to Government Servants.
2.  
3. ii)  Military pensioners who are in receipt of State Pension are allowed to draw Dearness Allowance on State Pension also in addition to Dearness Allowance on Central Pension. 
4.  

B. Medical Allowance:

The pensioners /family pensioners are allowed medical allowance of Rs.50/- per month.

Provisional Pensioners / Family Pensioners are also allowed Dearness Allowance and Medical Allowance.

11. PENSIONERS' HEALTH FUND SCHEME:

Tamil Nadu Government Pensioners’ Health Fund Scheme has been implemented with effect from 1.7.95 to provide financial assistance to pensioners for undergoing specialised treatment/surgery by constituting a fund called Tamil Nadu Government Pensioners’ Health Fund. 

12. PENSIONERS' FAMILY SECURITY FUND SCHEME:

The Government has introduced the Tamil Nadu Government Pensioners' Family Security Fund Scheme with effect from 1.1.1997.  Under the above scheme, a uniform contribution of Rs.70/- is deducted from the pension till the death of pensioners towards the Tamil Nadu Government Pensioners' Family Security Fund and the Fund is operated from 1.1.1998.  In the case of death of a pensioner after one year of contribution to the fund, a sum of Rs.25,000/- will be paid to the family from the fund.

13. PENSION TO STAFF OF AIDED EDUCATIONAL INSTITUTIONS INCLUDING LOCAL BODIES :

The Staff of Aided Educational Institutions and Local Bodies are allowed the same pensionary benefits as available to State Government servants.

14. DIRECTORATE OF PENSION :

For the welfare of pensioners, a Directorate of Pension is functioning with effect from 1.9.1994.  This Government has launched the Website on 19.7.2001 containing Guide to Tamil Nadu Government Pensioners on Retirement benefits.This Website can be opened in http://www.tn.gov.in/dop and viewed.