NPS Gratuity: To address a long-standing confusion regarding retirement gratuity under the National Pension System (NPS), the Department of Pension and Pensioners’ Welfare (DoPPW) has issued an important clarification. This clarification is particularly important for government employees who previously served in the military and later joined the civilian service of the central or state governments.
The department has clarified the circumstances under which gratuity will be repaid and those under which it will not. This clarification was issued in reference to Rule 4A of the Central Civil Services (Payment of Gratuity under NPS) Amendment Rules, 2025.
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When will the second gratuity not be available?
According to DoPPW, if a re-employed government servant has already received any of the following gratuity for his previous service, he will not get separate gratuity for the subsequent government service.
Superannuation gratuity
Retiring Gratuity
Gratuity on compulsory retirement
Compassionate gratuity granted after dismissal or removal from office
In such cases, the gratuity already received will be treated as final and no fresh gratuity will be payable for the subsequent Government service.
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Relief to employees of PSUs and autonomous bodies
However, the rules also provide an important exception. If an employee was previously employed in a public sector undertaking (PSU) or autonomous body and subsequently joined government service with appropriate permission, he or she will be eligible to receive gratuity for government service. In such cases, gratuity for government service may be paid in addition to the gratuity received from the PSU or autonomous body.
Limit on total gratuity
The department also clarified that employees who have served under both the state and central governments will be subject to a cap on the total gratuity they receive. The total of the gratuity received separately from the state and central governments cannot exceed the amount they would have received if the entire service had been performed under a single government.
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What it means for employees?
This clarification brings significant relief and clarity to defense personnel, re-employed civilian employees, and officers with mixed service records. This will not only bring uniformity to the rules, but also prevent unnecessary dual benefits and align gratuity payments under the NPS with existing pension rules.
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