India
Government Mandates Early Pay Review to Curb Excess Pensions
The Department of Expenditure, under the finance ministry, has ordered all ministries and departments to conduct a full review of government employees’ pay fixation orders, service records and pension details four years before retirement. The directive aims to catch excess payments early so they can be recovered. It follows numerous proposals for waivers of excess payments made under the Assured Career Progression (ACP) and Modified Assured Career Progression (MACP) schemes. The new rules make compliance mandatory and impose accountability for failures. Heads of offices must verify service records, qualifying service, salary details and other pension information before sending pension papers to the accounts office.
The move is significant 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, per 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 are also asked to set up monitoring mechanisms to track compliance and periodically review audit and verification records, especially for employees nearing retirement. The officials who spoke declined to disclose how many waiver proposals had been received, and queries to the finance ministry spokesperson and the secretaries of the Department of Expenditure and the Department of Posts remained unanswered.
One official said the 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," the official said. Earlier, pay fixation orders were not subject to a specific mandatory audit timeline.
Experts welcomed the move. Former Indian Economic Services officer Arun Kumar Jha said timely scrutiny of pay fixation orders can help detect discrepancies before they lead to substantial excess payments and that clear accountability will encourage departments to strengthen internal checks. Former director of the Dr Ambedkar Foundation DP Majhi added that regular audits and clear accountability will be key to preventing excess payments and ensuring greater accuracy in salary and pension calculations.
The revised norms also mandate periodic verification of employees’ qualifying service under Rule 30 of the Central Civil Services (Pension) Rules, 2021. Any discrepancies in service records must be rectified promptly. 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. "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," the second 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."