Family pension means a monthly financial support paid by the government to the dependents of a deceased government employee or pensioner. It ensures that the spouse and other eligible family members continue to receive a regular income after the employee’s death, whether it occurs during service or after retirement.
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A family pension is paid to the spouse of a government employee or pensioner upon their death. If there is no eligible spouse, to the eligible children (and in some cases dependent parents) as per the Family Pension Scheme, 1964, for those who entered pensionable service between January 1st, 1964, and December 31st, 2003, or earlier employees later covered under this Scheme.
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Pension depends on the emoluments drawn by the employee while in government service. In this context, emoluments refer to basic pay under Rule 31. Where there is a variation in emoluments, the average of the basic pay in the last ten months of service is calculated under rule 32.
Normal family pension is 30% of this pay, subject to the notified minimum and maximum limits.
If the government servant dies while in service or shortly after retirement, a family pension may be paid at an enhanced rate of 50% of pay for a limited period, after which it reverts to the normal 30% rate
Under the 7th Central Pay Commission, the minimum pension/family pension is ₹9,000 per month, and the maximum pension is 50%, andthe maximum family pension is 30% of the highest pay in the Government of India, subject to the rupee limits notified from time to time.
Also Read- National Pension Scheme
The surviving spouse or children who are below 25 years of age (or longer in the case of a disabled child) will be eligible for a family pension. This applies if the Government servant entered service on or after 01/01/1964 (ordinarily before 31/12/2003), or was an earlier entrant governed by the Family Pension Scheme, 1964, and:
Died while in service on or after 01/01/1964, or
Retired/died before 31.12.1963, or
Retired on or after 01/01/1964 and received a pension at death.
For example, Ramesh joined the Indian Defence Accounts Service (IDAS) as a Chartered Accountant in 1999. His family was thrilled when he joined this prestigious central government service at the age of 30. Little did they know what fate had in store for them.
In 2020, Ramesh passed away after a massive cardiac arrest, and that too while driving to work. His family was devastated. His family, while mourning him, also worried about the future of their children, which was at stake due to the loss of income.
Since Ramesh had joined a pensionable Central Government service in 1999 and died while still in service, his wife became eligible for family pension under the applicable Central Civil Services (Pension) Rules. Family pension for Central Government employees is governed by the Family Pension Scheme, 1964, as incorporated in the Central Civil Services (Pension) Rules, 1972, and now updated under the CCS (Pension) Rules, 2021.
The Department of Pension and Pensioners’ Welfare (DoPPW) has laid down the rules for the family members claiming the pension:
Show and submit the death certificate and pensioner’s Pension Payment Order (PPO) at the paying bank branch.
If you have a bank account (or a joint account with the deceased spouse) in the same branch, then the documents above are enough to start a family pension payment.
The bank will request KYC documents such as PAN, Aadhaar, and joint photographs.
The bank will start the family pension after updating the pensioner's date of death.
You receive a copy of the PPO back.
After the process, the bank contacts CPPC and starts to credit the pension into your account.
By default, the spouse/widow of the government servant is eligible to receive the pension. However, the following persons may also be eligible if the spouse is not present:
Dependent Children: Family pensions are payable to children up to 25 years of age, or until they marry or start earning a monthly income exceeding. ₹9,000 + Dearness Allowance (DA) admissible from time to time p.m., whichever is earlier.
Daughters: Widow daughter/divorced daughter/unmarried daughter of a deceased government servant is also entitled to a pension till her remarriage or up to a lifetime. However, if she starts earning a monthly income of more than ₹9,000 + DA, the pension will have to stop.
Parents: Family pensions are payable to wholly dependent parents of the deceased government servants w.e.f. 1st Jan 1998, only if the government servant is not survived by a widow or an eligible child. The pension will be payable to the mother first, failing which to the father.
Dependents with Disability: If a child or children of a government employee has a mental disorder or physical disability that prevents them from earning a living, they are eligible for a pension for the rest of their lives. They will continue to receive these benefits even after turning 25. This pension is subject to certain conditions.
Learn more about the best saving plan for your retirement.
Family pension is granted as per the order of preference in CCS (Pension) Rules.
Over 77 lakh people in India receive a pension. This represents 0.5% of India's total population.
Source: The Hindu
You can use the online pension calculator on the pensioners’ portal. First, select the appropriate calculator on the page, then enter the information in the input area. Here’s a guide on how to calculate the family pension amount:
If you are wondering what is npa in salary, it is a Non-Practicing Allowance. A 20% addition to basic pay for government doctors barred from private practice (7th CPC rules).
After entering service/retirement details, the calculator shows monthly basic pension, family pension, enhanced family pension, and commuted pension estimates
A retirement planning calculator is a simple tool that gives you an idea of the corpus you can accumulate with a regular monthly investment for your golden years.
The above calculation and illustration of figures are indicative only and not on actual basis.
The family pension scheme is a crucial financial safety net for a pensioner's dependents. For many Indian families, especially those with elderly parents or homemaker spouses, serves as a crucial source of income after the pensioner’s death.
While both a pension and a family pension are intended to provide financial support, they differ significantly. Understanding these differences is essential when planning for your family’s long-term financial stability. Here’s a quick overview of the same:
| Aspect | Pension | Family Pension |
|---|---|---|
Recipient | Paid to the retired individual for their lifetime | Paid to the surviving dependents (spouse, children, or parents) of a deceased pensioner |
Amount Received | Generally higher, calculated based on the pensioner's salary and service period | Typically, 50% of reckonable emoluments (enhanced rate, 7-10 years), then 30% of emoluments (normal rate) |
Tax Implications | Pension is taxed as salary income | Family pension is taxed as “Income from Other Sources,” and the family member can claim a deduction of the lower of one‑third of such pension or ₹15,000. |
Payment Duration | Paid until the pensioner’s death | Paid to eligible family members until certain conditions are met (e.g., spouse’s remarriage, dependent child turning 25, etc.) |
Commutation Impact | A commuted pension reduces the retiree’s monthly pension | Family pension is generally based on full reckonable emoluments |
A family pension scheme is designed to provide continued financial support to the dependents of a deceased pensioner. This scheme is particularly helpful for families where the pensioner is the primary or sole breadwinner. Understanding the different types of family pensions can help families better plan for their financial future.
The two primary types of family pensions are:
A commuted pension is a pension payment option in which the pensioner receives a lump-sum payment upfront in exchange for a reduced monthly pension thereafter. This lump sum can be a helpful financial resource for covering immediate expenses, such as medical bills, home renovations, or outstanding loans. Its key features include:
Lump Sum Payment: The pensioner can choose to withdraw a portion (up to one-third in government schemes) of their total pension amount as a one-time payout.
Reduced Monthly Pension: After taking the lump sum, the pensioner’s monthly pension amount is reduced proportionately.
Tax Benefits: The commuted portion of the pension is usually tax-free for government employees. For non-government pensioners, a portion of the commuted pension may be tax-exempt under specific conditions.
If a pensioner who has opted for a commuted pension unfortunately passes away, the family pension will generally be calculated based on the reduced pension amount. This may result in a lower monthly payout for surviving dependents.
Suppose Mr. Sharma, a retired government employee, opts to commute one-third of his pension to pay off a home loan. This lump sum provides immediate financial relief. However, his remaining monthly pension has decreased. If Mr. Sharma unfortunately passes away, his family will receive a family pension calculated on his full reckonable emoluments.
A periodical pension is a regular pension paid in full without any deductions for a lump sum withdrawal. This option is suitable for individuals who prefer a consistent flow of income during retirement rather than an upfront payout. The core features of an uncommuted pension plan are as follows:
Full Monthly Pension: Because no portion of the pension is withdrawn as a lump sum, the retiree continues to receive their full pension.
Stable Family Pension: In case of the pensioner’s death, the surviving family members will receive a pension calculated on the full pension amount.
If the pensioner has chosen a periodical pension, the surviving family members may receive a higher monthly pension, providing greater financial stability.
For example, Mrs. Nair, a retired school teacher, opts for a periodical pension to ensure a steady income flow. In her absence, her family will receive a family pension calculated based on her full reckonable emoluments.
Choosing between a commuted pension and an uncommuted pension depends on your family's financial requirements. While a commuted pension can provide immediate financial relief, an uncommuted pension ensures steady support for dependents over time.
Note: Family pension ignores the retiree's commutation choice and uses the full emoluments base.
A family pension is a very important financial safety net for families of government employees. It ensures that the deceased person's family members can maintain a decent standard of living even after losing their primary earner. By understanding the various aspects of pensions, one can make informed decisions to keep a safety umbrella over their loved ones.
Family pension rules vary by state but generally follow the CCS model: 30% of normal pay or 50% of the last pay/emoluments. Check state pension rules.
The new family pension rule states that women who are central government employees can now nominate their child, rather than just the option to nominate their husband.
Pension to unmarried, divorced, or widowed daughters above the age of 25 shall be payable only after the other children below are no longer eligible for the pension.
The family pension rules for central government employees set and enforce the nature of the pension, which is a welfare scheme framed to provide relief to the widowed spouse and children of a deceased employee or pensioner.
Pension to widowed daughters above the age of 25 shall be payable only after the other children below are no longer eligible for the pension.
A disabled son is very much eligible for a family pension for life and will be provided with a pension after the passing of his parents.
Normal rate: 30% of emoluments (minimum ₹9,000); enhanced rate: 50% for 7-10 years.
Family pension in labour law refers to the Employees' Family Pension Scheme, 1971, under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
This scheme provided monthly pensions to families (spouse, children) of deceased EPF members employed in covered factories/establishments. It was replaced by the Employees' Pension Scheme, 1995 (EPS-95), effective 16 November 1995, with contributions from the employer (8⅓% of pay), the employee (⅝%), and the government (1⅙%).
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