If you’re a central government employee who joined service on or after January 1, 2004, you’ve likely wondered whether you’d get the same retirement benefits as colleagues who retired under the old pension system.
Earlier, under the National Pension System (NPS), pensions shifted from guaranteed payments to market-linked savings, creating confusion, especially about gratuity.
Now, the government has officially clarified: you will get gratuity along with your lump-sum NPS withdrawal when you retire. This decision was announced by the Ministry of Personnel, Public Grievances and Pensions.
Previously, many NPS employees believed the 60% lump-sum withdrawal from their NPS account replaced gratuity, creating doubts and making retirement planning difficult.
This clarification removes that confusion. Both benefits can be claimed—gratuity is separate from your NPS withdrawal.
Since gratuity is a significant amount—equal to 15 days’ salary for every year of service (up to ₹20 lakh)—this ensures you’ll have more money to support yourself and your family after retirement.
If you have completed at least 5 years of service, you’re entitled to gratuity. But even if you haven’t finished 5 years and retire because of medical reasons, you can still receive gratuity.
This rule also applies to employees who retired in the last 2 years. So if you’re one of them, you should approach your department to claim your pending benefits.
One major criticism of the NPS was that it felt less secure than the old pension scheme. This new clarification helps close that gap by guaranteeing gratuity is part of your retirement package.
Now, the system is more similar to the earlier scheme, giving you better financial protection and reassurance that your future isn’t compromised because you joined service after 2004.
If you’re retiring soon or have retired in the past 2 years, check if you’re eligible for gratuity. Visit your HR or personnel department and ensure all your paperwork and records are up to date.
Make sure your retirement documents clearly show that you are entitled to gratuity along with your NPS withdrawal.
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This new rule is a major win for thousands of central government employees under NPS. It provides certainty, strengthens trust, and helps you plan your retirement with confidence. With both gratuity and lump-sum payouts, your financial future is more secure, allowing you to support your family, invest, or meet healthcare expenses with peace of mind.
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Published on: Jul 2, 2025, 11:09 AM IST
Kusum Kumari
Kusum Kumari is a Content Writer with 4 years of experience in simplifying financial market concepts. Currently crafting insightful content at Angel One, She specialise in breaking down complex topics into easy-to-understand pieces, blending expertise in market fundamentals and technical analysis.
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