Some media reports are claiming that the Centre has decided to remove key post-retirement benefits for retired government employees. The reports suggest that this rule change is part of the Finance Act 2025.

Under the new rules, pensioners will no longer receive dearness allowance (DA) increases or benefits from future pay commissions, including the upcoming 8th Pay Commission, claim the reports circulating online.

Let’s fact-check this claim

There is an amendment to Rule 37 of the CCS (Pension) Rules, 2021. The Department of Pension and Pensioners’ Welfare, in consultation with the Department of Expenditure, Ministry of Finance, Department of Personnel & Training, Department of Legal Affairs, Legislative Department, and the Comptroller & Auditor General, has introduced an amendment to Rule 37(29)(c).

Also read: 8th Pay Commission delay: Govt employees retiring in Jan 2026 or later to lose benefits if implementation pushed?

The amended Rule 37(29C) states:

… the dismissal or removal from service of the public sector undertaking of any employee after his absorption in such undertaking for any subsequent misconduct shall lead to forfeiture of the retirement benefits for the service rendered under the Government also and in the event of his dismissal or removal or retrenchment the decision of the undertaking shall be subject to review by the Ministry administratively concerned with the undertaking.”

So this provision says if a PSU employee, earlier working in a government department, is dismissed for misconduct, his entire retirement benefits can be forfeited. These benefits include a pension from his earlier government service.

This is a significant shift from the previous rule which said that the dismissal from a PSU should not impact pension benefits from prior government service.

Coming to the reports’ claim on allegedly denying retirees pension and other retirement benefits under new rules in the Finance Act 2025, the change in Rule 37 has nothing to do with dearness allowance or pay commission benefits.

Hence, the reports linking this amendment to the Finance Act and claiming that DA hikes and Pay Commission benefits have been removed are not true.

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It is also important to note that the government has not issued any official notification or confirmation about such changes.

After the Finance Bill 2025 was passed in Parliament in March this year, a controversy emerged over a pension-related provision in the Bill. It was said by employee unions that the provision was harmful for retirees and also create a disparity between old and new pensioners.

Finance Minister Nirmala Sitharaman then clarified in Parliament to settle the matter. She said that the provision only reaffirmed existing regulations dating back to June 1, 1972, and did not alter civil or defence pensions.

The Department of Pension & Pensioners’ Welfare (DoP&PW) also stated that the pension parity introduced by the 7th Central Pay Commission (CPC) would remain intact.

Also read: Pension rules change: Govt employees’ retirement benefits can be denied if they are found…

Summing up…

The claims that dearness allowance hikes and Pay Commission benefits have been removed for retired government employees are not true. The only relevant rule change pertains to misconduct-related dismissals of PSU employees absorbed from government service.