Refund of Employee’s Share with Returns under Railway Pension Rules

In case of death, disablement, or invalidation of a railway servant under the National Pension System (NPS), the Ministry of Railways has introduced a structured process for refunding the employee’s pension share. Here’s a quick overview:

• Government Contribution Transfer: Upon death or disablement, the government contribution along with the accumulated returns will be transferred to the government account.
• Employee’s Share Refund: The employee’s share, including interest, will be refunded to the railway servant’s nominee or legal heirs in case of death or discharge due to disablement.
• Interest Calculation: The interest on the employee’s contribution is calculated at the same rate as Public Provident Fund (PPF) deposits from the date of death/boarding out to the date of payment.
• Effective from January 2004: These instructions apply to all cases from 1st January 2004, ensuring clarity on the refund process for railway servants or their families.

This refund process ensures a fair and transparent approach to returning the employee’s pension corpus in the event of a railway servant’s unfortunate death or disablement, while maintaining government accountability and contribution.

Detailed Guidelines for Refund and Transfer

The following instructions outline the process in detail regarding the refund of employee’s pension corpus in cases of death, disablement, or invalidation:

1. Applicability of the Refund

As per the guidelines, in case of the death of a railway servant or his discharge from service due to invalidation or disablement, the following steps are to be followed:

• The Government contribution along with returns on the accumulated pension corpus will be transferred to the Government account.
• The remaining accumulated pension corpus will be refunded to the employee’s nominee or legal heir(s), in lump sum.

2. Refund Process for NPS Employees

If a railway servant or their family members availed the benefits under the Railway Services (Pension) Rules, 1993 or Railway Services (Extraordinary Pension) Rules, 1993, the process is as follows:

• If the entire accumulated pension corpus was transferred to the Government account, only the Government contribution with returns will remain in the Government account.
• The remaining corpus will be refunded to the employee, nominee(s), or legal heir(s) with the applicable interest.

3. Calculation of Interest

The interest on the employee’s contribution will be calculated in the same manner as the Public Provident Fund (PPF) deposit rates. The interest is calculated from the date of death/boarding out until the date of payment of the refund to the nominee or legal heir.

4. Refund of Government Contribution with Returns

In cases where the NPS accumulation has already been refunded to the Government account, the railway servant or their family members will need to refund the Government contribution with returns. This is required to continue availing benefits under the Pension Rules.

5. Effective Date and Implementation

These guidelines come into effect from 1st January 2004, ensuring that any cases of death or disablement after this date will follow the described process for refunding the employee’s share with returns.

Additional Instructions

Further instructions regarding accountal procedures for pension refunds will be issued separately by the Accounts Directorate, as mentioned in Annexure-A of DoP&PW’s O.M. No. 57/6/2021-P&PW(B) dated 14.10.2024.