Centre to review pay, pension records four years before retirement

The move follows a large number of proposals received by the department seeking waivers from the recovery of excess payments made to government employees due to incorrect pay fixation, increments and benefits under the Assured Career Progression (ACP) and Modified Assured Career Progression (MACP) schemes.

The new norms make compliance mandatory and provide for accountability in cases of failure. Heads of offices have also been asked to ensure that service records, qualifying service, salary details and other pension-related information are verified before pension papers are sent to the accounts office.

The development assumes significance given India’s 3.65 million civilian central government employees and 3.39 million pensioners, according to data provided by Minister of State for Finance Pankaj Chaudhary in a written reply to the Rajya Sabha on 25 March 2025.

The Union government’s expenditure on pensions and other retirement benefits rose 12.3% to ₹3.46 trillion in FY25 from ₹3.08 trillion in FY24, according to the Comptroller and Auditor General of India (CAG). Defence pensions accounted for 45.57% of the total outgo in FY25, followed by civil pensions at 33.57%.

Ministries and departments have also been asked to establish monitoring mechanisms to track compliance and periodically review audit and verification records, particularly for employees nearing retirement. However, both officials declined to disclose how many waiver proposals had been received.

Queries sent to the spokesperson of the finance ministry and the secretaries of the Department of Expenditure and the Department of Posts remained unanswered till press time.

According to the first of the two officials cited above, the new instructions were issued after consultation with the Controller General of Accounts.

“Now, government departments must check pay fixation orders issued after an employee’s promotion, annual increment, financial upgradation or other pay revision within three months of the order being issued or by the end of that financial year,” this official said.

Earlier, pay fixation orders were not subject to a specific mandatory audit timeline, although departments were responsible for ensuring that employees’ pay was fixed correctly.

The new instructions aim to detect errors earlier and prevent excess payments from accumulating before they are identified.

Experts’ view

Experts said the move was a step in the right direction.

“Timely scrutiny of pay fixation orders can help detect discrepancies before they lead to substantial excess payments, while clear accountability will encourage departments to strengthen their internal checks and financial controls,” said Arun Kumar Jha, former Indian Economic Services officer and chancellor of the National Institute of Advanced Manufacturing Technology, Ranchi.

“The new guidelines should strengthen financial discipline across government departments and help identify pay fixation errors at an early stage. Regular audits and clear accountability will be key to preventing excess payments and ensuring greater accuracy in salary and pension calculations,” said DP Majhi, former director of the Dr Ambedkar Foundation, an autonomous body under the ministry of social justice and empowerment.

Service verification

The revised norms also mandate periodic verification of employees’ qualifying service under Rule 30 of the Central Civil Services (Pension) Rules, 2021, with any discrepancies in service records to be rectified promptly.

Rule 30 of the Central Civil Services (Pension) Rules, 2021, refers to the verification of a government employee’s qualifying service to determine the service period that counts towards pension benefits.

To ensure compliance, the government has made it mandatory for the Internal Audit Wing or the concerned Pay and Accounts Office to certify that pay fixation orders have been checked, the second official said.

“If errors or excess payments are found after the pay fixation orders have been certified, the concerned Pay and Accounts Office and/or the Chief Controller or Controller of Accounts will be held responsible,” this official said.

“Once a certificate confirming the correctness of pay has been issued, no recovery of any nature can be made from the employee for the period covered by the certificate. Any loss to the exchequer arising from incorrect pay fixation may instead be recovered from the office that approved the certificate.”

Dhirendra Kumar is a seasoned policy reporter with about 20 years of experience in deep, on-ground reporting across key economic and governance sectors. His work spans finance, public expenditure, disinvestment, public sector enterprises, textiles, trade, consumer affairs, and agriculture, with a strong focus on uncovering structural policy shifts and their real-world impact.<br><br>Kumar has been awarded the Chaudhary Charan Singh Award for Excellence in Journalism in Agricultural Research and Development, recognising his contribution to reporting on critical issues in the farm sector. He has also been a recipient of a fellowship in international trade from the National Press Foundation, which has further strengthened his coverage of global trade dynamics and their implications for India.<br><br>Kumar is known for breaking complex policy developments into clear, accessible stories. His reporting focuses on uncovering under-reported trends, explaining policy shifts, and helping readers stay informed about developments that shape India’s economic landscape.