“Pension is not charity, but a right earned through a lifetime of service”
Former Prime Minister Atal Bihari Vajpayee
One step forward, two steps backwards. There can’t be better words to describe the controversial Central Civil Services (Pension) Rules also referred to as the CCS (Pension) Rules, which lays down the legal framework for pension paid to central government employees in India.
Pension is a “deferred wage” or compensation earned after years of service
In any model of good governance – it is the paramount duty of the government to provide financial stability, dignity of life and self-respect to the retired people who gave it the best part of their life working from sun-rise to sunset. They now need an environment where they are respected, valued, and wanted. Retirement is supposed to be a phase where people can enjoy life without any stress, tensions and worries, after a lifetime of physically, mentally and emotionally taxing service. It is the retired people’s turn now to live life king size. The concept of living “king-size” does not just mean living in luxury, but an unforgettable state when they are allowed to live life — the way they always wanted to — without any fear of financial instability or neglect. Finally after retirement it is their turn to live life freely – with respect, comfort, and peace of mind.
In a welfare state it becomes the government’s duty and responsibilities to look after people in the fag-end of their life who served the nation for decades, but now are not in a position to move or do things, they used to do — in the past. This does not only mean financial support, but also basic needs like healthcare, and emotional well-being. It could involve healthcare facilities, social engagement programs to prevent isolation, and more. At the end of a long, hardworking life, the retired people deserve dignity and respect, as well as support to navigate through the remaining part of the life with ease and security.
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All said and done, the point to be noted is that pension is not a goodwill measure. According to the Supreme Court pension is a “deferred wage” or compensation earned after years of service. In conventional Pension Schemes, the government contributes a part of salary every month towards the pension payments on retirement, whereas in NPS it is more clearly codified.
Why pension? Why governments should get involved?
Pensions is a critical element of good governance. It is a recognition of hard-work and loyalty of a government servants who gave their life and sweat working for the government for 35-40 years. It is now the government duty to return the favour and provide financial security to the pensioners and their families when these frail old men and women are not physically, mentally or emotionally fit to work and bring extra income to run the family affairs. Pensions are a necessity like a safety net, to ensure fairness, and maintain economic stability.
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Pension systems from around the world:
India is not the only country paying pension to the government servants. Here are some examples of pension systems from around the world:
United States
- John, a retired US citizen receives a monthly pension of $2,500 after regularly contributing to the Social Security system for 35 years
- Emily, a retired teacher receives a monthly pension of $3,000 based on her years of service and contributions to a private pension plan through her employer.
Living a decent life in the USA on a pension of $2500-3000 per month can be challenging. On an average, you can expect to pay around $1,000 – $1,500 per month for a one-bedroom apartment in a decent neighbourhood. Food: $500 – $700, Utilities: $100 – $200, basic health insurance plan can cost around $200 – $500. On average, you can expect to pay around $500 to $1,000 per month for a car payment, insurance, gas, and maintenance.
Canada
- David, a Canadian receives a monthly OAS pension of $600, based on his age and residency.
- Rachel, a retired Canadian citizen receives a monthly pension of $1,200 due to her contribution to the CPP through her employer.
Living a decent life in Canada on a pension of $600-1200 per month can be challenging, but it’s more manageable compared to the United States. Canada’s social safety net, healthcare system, and lower cost of living in some areas can help make your pension more sustainable.
United Kingdom
- James, a retired British citizen, receives a weekly state pension of £160, based on his National Insurance contributions.
- Sarah, a retired British citizen, contributed to a private pension plan through her employer. She receives a monthly pension of £2,000, based on her years of service and contributions.
£750-£1,200 per month: You might need to make lifestyle adjustments, such as downsizing your living arrangements or reducing discretionary spending. But live more comfortably with an income level of £1,200-£2,000 per month
Australia
- Michael, an Australian receives a fortnightly age pension of $850 due to his age and residency.
- Emma receives a monthly pension of $3,500 due to her contribution to a superannuation fund through her employer.
You can lead a decent life in Australia on a pension of $1700-3500 per month and maintain a comfortable standard of living.
Germany
- Hans receives a monthly pension of €1,500 due to his earnings history and contributions.
- Anna receives a monthly pension of €2,000 contributed by her to an occupational pension plan through her employer.
Living a decent life in Germany on a pension of €1,500 – 2000 per month and maintain a relatively comfortable standard of living, depending on factors like location, lifestyle, and personal preferences.
Japan
- Taro, a Japanese receives a monthly pension of ¥200,000 due to his earnings history and contributions.
- Yumi receives a monthly pension of ¥300,000 due to her contribution to a corporate pension plan through her employer.
A pension of ¥200,000 – ¥300,000 per month can help you lead a decent and relatively comfortable life outside major cities like Tokyo or Osaka, or in areas with lower costs of living in Japan.
China
- Wang, a retired Chinese citizen, receives a monthly social insurance pension of ¥4,000, based on his earnings history and contributions.
- Li, a retired Chinese citizen, contributed to an enterprise annuity plan through her employer. She receives a monthly pension of ¥6,000, based on her years of service and contributions.
A pension of ¥4,000 – ¥6,000 per month can provide you a relatively comfortable standard of living and decent life in smaller cities or towns, or in areas with lower costs of living in China.
These are just a few examples of how governments in different parts of the world pass on the pension benefits to retired people around the world.
Pensions in India
Indians have always been attracted towards government, and pension has been a significant factor in this attraction. The earliest known framework for pensions in India was the Pension Code of 1872, designed for British civil servants.
The East India Company (1757 to 1858), formally known as the Governor and Company of Merchants of London was among the first entities to introduce the concept of pensions for its employees. In 1874, after the East India Company was dissolved, its functions were taken over by the British government.
The game of hide and seek
In a dramatic turn of events on March 25 the Government of India introduced the CCS (Pension) Rules and Principles Amendment Bill in the Lok Sabha to segment the pensioners into old and new category based upon their date of retirement. The Government of India while moving the Finance Bill for the approval of Parliament has included a chapter for “Validation of the Central Civil Services (Pension) Rules and Principles for expenditure on pension liabilities from the Consolidated Fund of India”.
The bill also sought to validate the expenditure on Pension liabilities from the Consolidated Fund of India. This bill was passed in the Lok Sabha on March 25, 2025 as part of the Finance Bill, 2025.
The legislation validates the principle that the Central Government has the authority to establish distinctions among pensioners and selectively apply the recommendations of the Central Pay Commissions on the basis of their date of retirement. The legislation was made effective from June 1, 1972 and endorsing all Rules under Article 309 of the Constitution, CCS (Pension) Rules, 1972, CCS (Pension) Rules, 2021, CCS (Extraordinary Pension) Rules, 2023 amended from time to time.
The Central Civil Services (Pension) Amendment Bill created a rift between old and new pensioners. This was the last straw on the camel’s back and boomeranged because it would have meant excluding the old/existing pensioners from the benefits announced by Pay Commissions in future.
The government made no attempt to explain why this was needed and what would be the amount of money saved by excluding old pensioners from getting the benefit of the pay commissions. This was not acceptable to the pensioners as it allowed the government to play hide and seek with the pensioners based on their retirement dates.
Incidentally this is not the first time that the CCS (Pension) Rules originally codified in 1872 have undergone numerous amendments since their inception. The rules were modified by the 4th, 5th, 6th, and 7th Central Pay Commissions. The 7th CPC passed the full benefit to pre 2016 retirees while earlier CPCs also passed a significant portion of revision to old retirees.
But the manner in which the amended bill was passed in the Lok Sabha on March 25, 2025 (as part of the Finance Bill, 2025) led to widespread controversy and outrage among millions of central government employees working in civil, defence, telecom, railway, postal and other departments. Eventually the legislation regarding the Validation of the Central Pay Commission (Pension) Rules and Principles for expenditure on Pension liabilities from the Consolidated Fund of India was passed in Lok Sabha as part of the Finance Bill, 2025. The legislation led to an apprehension among the government employees that their pension amount might get affected.
As a damage control exercise Nirmala Sitharaman clarified in the Rajya Sabha that:
- There will be no change in pension for defence as well as central government pensioners due to the validation of existing rules.
- All Central government pensioners who retired before January 1, 2016 are receiving pension at par with those who retired after January 1, 2016
“The validation rules DO NOT, in any way, change or alter the existing pensions so fixed of existing Civil Pensioners from the present stage. The validation rules also DO NOT affect Defence Pensioners in any way as they are covered by separate rules,” Nirmala Sitharaman said while speaking in the Rajya Sabha. She further added that validation of existing rules was done in view of the recommendations made by the 6th Central Pay Commission (CPC). She said that it is not an amendment to any pension Rules or instructions but only a reaffirmation of the same with effect from June 1, 1972, i.e. the date the CCS (Pension) Rules were promulgated.
Replying to the discussion on the Finance Bill, 2025, and the Appropriation (No 3) Bill, 2025, in the Rajya Sabha, Finance Minister Nirmala Sitharaman clarified that the recent amendments to pension rules are only a validation of existing policies and do not alter benefits for civil or defence pensioners. The legislation has been made effective from June 1, 1972 validating all Rules made under Article 309 of the Constitution for CCS (Pension) Rules, 1972, CCS (Pension) Rules, 2021, CCS (Extraordinary Pension) Rules, 2023 including all amendments from time to time.
The manner in which the government tried to marshal the CCS (Pension) Rules pointed the needle of suspicion on the government – which apparently developed cold feet after seeing the criticism and protests from the civil and defence ex-servicemen against the amendments in the Central the CCS (Pension) Rules.
Nirmala Sitharaman tried to shed off all responsibility and blamed the then Congress-led UPA government headed by Manmohan Singh who was in power when the 6th Central Pay Commission (CPC) made its recommendations. The impression one got hearing her parliament speech on the internet was that the Congress was the main culprit which had done everything bad in the 6th pay commission – about 19 years ago and the present government has no intention of denying the benefits of the pay commissions to the future, present and old pensioners.
Significantly she made no mention of the more recent 7th Pay Commission chaired by Justice Ashok Kumar Mathur, a former Chief Justice of Calcutta High Court, Madhya Pradesh High Court, and Judge of the Supreme Court of India in 2016 which made a big impact on the pension system in India. The point to be noted is that Narendra Modi was the Prime Minister – when the 7th pay commission submitted its report.
But the moot point is – why are we flogging the dead horse. The sixth pay commission (2006-2008) is an old issue discarded in the dust-bins of memory. No one remembers – even 40% of what it recommended. In any case there were only about 6 million government employees in 2008 and more than a fair number of 6th CPCs recommendations were accepted or implemented.
In the present context it is not understood why the Finance Bill included the validation of pension rules. What forced the government to pass such bill?
Today there are approximately 48.66 lakh central government employees and 66.55 lakh pensioners.
Another point to be noted is that – no government, Congress, BJP, or otherwise likes to give anything to the serving or retired government employees and is always looking for excuses – how to make it happen.
Significantly no single but several governments have tried to play mischief and deny the legitimate rights to the Government employees.
The issue is all the more relevant because the 8th pay commission has been constituted and expected to come into effect on January 1, 2026. What if the 8th CPC itself comes up with a recommendation that peopled who retired before December 31, 2025, will not be eligible for the benefits it may recommend? Would that not put the Court, the Government and the pay commission in an awkward position – each of them speaking in a different language?
What would be the repercussions of this if an employee or an Officer who retired prior to the date of implementation of Pay Commission recommendations after serving in a particular post? Would he be compensated for putting in equal length of service? If not – his junior will get higher pension for no other reason than the fact that he was in service or nearing retirement when the 8th pay commission announced some benefits which his boss – couldn’t get even after trying his level best.
Also what was the urgency? Why the government could or did not wait for the 8th pay commission to decide whether to pass on the benefits of the new revisions to the old pensioners or not? The net result was that the matter went out of control – leading to unnecessary and avoidable embarrassment for the government.
Meanwhile the Rajya Sabha returned the Finance Bill to Lok Sabha, which had already passed the Bill on 25 March. There was no harm and the Government of India could have introduced the CCS (Pension) Rules and Principles Amendment Bill in the Lok Sabha to segment the pensioners into old and new category but the manner in which it was camouflaged as a Finance Bill indicates that there was a game of hide and seek behind it.
Pension Code of 1872 and thereafter
The framework for pensions in India was laid by the Pension Code of 1872, designed for British civil servants. The British colonial administration granted pension benefits to civil servants as a reward for their length of distinguished service, but while there was a provision for pension – it was limited, and only for senior British officers who were close to the top brass in the British regime and the Indian civil servants were largely kept out of it.
After 1947, the newly formed government tried to reform the colonial pension system then called Central Civil Services (Pension) Rules, 1950 to provide a fair and comprehensive pension structure for all government employees. The purpose of these reforms was to ensure that the retired government employees were well looked after and provided with financial security. The 1950 Rules not only provided for pensions after superannuation but also in case of invalidity, family pensions, and provisions for employees who voluntarily retired.
Pension to the Gurkhas – at their door step
The British government recognized the importance of providing a secure post-retirement life for its employees after the 1st war of independence in 1857. This helped them foster loyalty and stability within the colonial administration.
The British Indian Army ensured that the Gurkha soldiers from Nepal known for their bravery and loyalty received their pension on time and their morale was high. To make this happen, the British government arranged for the payments to be sent directly to their villages in Nepal via money order. This helped them gain respect from the Gurkha soldiers and their families in the villages. The Indian army continued the practice of conducting pension durbars in Nepal to distribute pension of the Gurkha soldiers – right at their door step with the least cumbersome paperwork.
Even today the Military Pension Branch (MPB) in Kathmandu maintains two Pension Paying Offices (PPOs) in Pokhara and Dharan to pay the pension of not only Gurkha soldiers but also Nepal-domiciled Gorkha pensioners who have served in various Central and State Government departments in India.
Post-independence era scenario
After India gained independence in 1947, the government of India realised the importance of boosting the morale, maintaining stability and keeping the central government employees of Defence, Civil Services, Railways, Posts, and Telecom departments happy.
As of March 31, 2023, the total number of central government pensioners in India was approximately 6.8 million. The distribution of these pensioners across various departments is as follows:
- Defence Pensioners: Over 3.38 million
- Civil Pensioners: Approximately 1.14 million
- Telecom Pensioners: Over 438,000
- Postal Pensioners: Approximately 301,000
- Railway Pensioners: Over 1.52 million
The security and stability offered by government pension has made these jobs highly sought after, particularly in a country where social security nets are limited. The prestige and respect associated with government jobs have also contributed to their appeal. As a result, the central government disbursed a pension amount of approximately ₹2.42 trillion to these pensioners in financial year 2022-23. The expenditure per department was as follows:
- Civil Pensioners: ₹40,811 crore
- Defence Pensioners: ₹1,25,269 crore
- Telecom Pensioners: ₹12,448 crore
- Railway Pensioners: ₹55,034 crore
- Postal Pensioners: ₹8,214 crore
The total number of central government pensioners in India is huge – it represents a massive vote bank which cannot be ignored – at any cost. The government of India acknowledged that pensioners had dedicated their lives to serving the nation, and it is essential to ensure their financial well-being and happiness. Hence the government introduced several initiatives:
- Pension Scheme – providing a guaranteed income to retired employees.
- Dearness Allowance (DA) – a cost-of-living adjustment to combat inflation and ensure that the purchasing power was maintained.
- Pension Revision – to ensure that benefits kept pace with inflation and rising cost of living.
- Healthcare Benefits – providing medical coverage and benefits to pensioners.
- Pensioners’ Associations – providing a platform for pensioners to voice their concerns and receive support.
Supreme Court Judgments
Several landmark Supreme Court judgments played a crucial role in shaping the pension landscape in India. The most important judgement was D.S. Nakara & Others Vs. UOI, (1983) 1 SCC 305 delivered by a 5-Judge Constitution Bench. The Court held that a cut off date cannot make equals as unequals as it violates Article 14 of the Constitution of India.The division which classified pensioners into two classes was held to be artificial and arbitrary and not based on any rational principle.There cannot be a mini-classification within a class.
The notion that pension as a right is also supported by the Universal Declaration of Human Rights (UDHR), adopted by the United Nations in 1948, which clearly states that: “Everyone, as a member of society, has the right to social security.”
Pension of American soldiers and bureaucrats
The pension for American troops and bureaucrats are generally well-funded and provide a range of benefits, including:
- The US military offers a pension system that provides a guaranteed income stream to retired service members.
- Federal Employees Retirement System (FERS) provides a pension, social security, and thrift savings plan to federal employees.
- The Veterans Administration offers a range of benefits, including disability compensation, education assistance, and healthcare.
These pension systems are generally well-funded and provide a range of benefits to American troops and bureaucrats. They generally provide a strong safety net for those who serve their country.
Conclusion
The provision of pensions has been a crucial factor in the attraction of government jobs, offering security and stability to employees. As India continues to evolve and grow, it is essential to recognize the importance of pension in maintaining a stable and motivated civil service.
