Government Revises Pension Formula for Pre-2016 Pensioners
The Punjab Government's Department of Finance has announced a major revision in the methodology for calculating the pension and family pension of employees who retired before January 1, 2016. The new instructions, issued on November 28, 2025, substitute the earlier methodology given in Para 5.1 of the instructions dated October 29, 2021.
Key Revision: Fixed Formula Calculation
The Government has adopted a fixed formula to ascertain the revised consolidated pension/family pension, effective from **January 1, 2016**. Pension Disbursing Authorities are instructed to work out the consolidated rate by adding together the following components:
- The existing basic pension/family pension as on December 31, 2015.
- Dearness relief at the rate of 113% of the Basic Pension/Family Pension.
- An additional amount equal to 15% of the sum of the existing basic pension/family pension and the Dearness Relief (113%).
The final revised pension/family pension amount will be rounded off to the next higher rupee and will be treated as basic pension for the purpose of granting Dearness Relief from 01.01.2016.
Protection of Minimum Pension
The new fixation is subject to the provision that the revised pension/family pension shall, in no case, be lower than fifty percent or thirty percent (as applicable) of the minimum pay corresponding to the level in the Pay Matrix. This minimum pay is determined using the pay scale/pay band and grade pay of the post from which the employee retired.
It is also noted that for employees whose qualifying service falls short of the full pension requirement (33 years or 25 years, as applicable), the pension will be reduced suitably on a pro-rata basis.
Relief on Recovery of Excess Payment
In a significant move benefitting pensioners, the government has decided that **no recovery** shall be made for any excess payment made to pensioners or family pensioners up to the month of issue of these new instructions. This decision is based on the welfare nature of the state and aims to mitigate the financial distress of the pensioners.
However, the pension for the month following the issue of these instructions (i.e., December 2025 onwards) shall be paid strictly as per the re-fixed amount. The Disbursing Authority will be held liable for any excess payment made after the issue date of these instructions.
Implementation and Monitoring
Two-member committees have been constituted both for offices in Chandigarh/Mohali and field offices to ensure accurate implementation and fixation of the revised pension/family pension.
The government confirms that all other terms and conditions relating to the pension revision will remain unchanged.
