Centre increases retirement and death gratuity limits

New Delhi: In accordance with recommendations laid out by the Seventh Central Pay Commission, the Department of Pension and Pensioners’ Welfare has announced an increase in the maximum limits for retirement gratuity and death gratuity. Effective from January 1st, 2024, the new ceiling has been raised from Rs 20 lakh to Rs 25 lakh, marking a 25 percent increase.

This development stems from the government's decision to elevate the Dearness Allowance rates to 50 percent, as outlined in a directive dated March 12, 2024. The enhancement in Dearness Allowance, from the existing 46 percent to 50 percent of the Basic Pay, has paved the way for the adjustment in gratuity ceilings.

The Department of Pension & Pensioners’ Welfare, following consultations with stakeholders, issued a set of instructions that directive explicitly increases the maximum limit of Retirement Gratuity and Death Gratuity to Rs. 25 lakh under the CCS (Pension) Rules, 2021, and the CCS (Payment of Gratuity under NPS) Rules, 2021.

Both retirement gratuity and death gratuity are contingent upon the employee's last drawn basic pay and the duration of service rendered. This revision underscores the government's commitment to ensuring the welfare and financial security of its pensioners in line with contemporary economic realities.

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