What is a Family Pension?
The Family pension is the money provided to the family of the government employee in case he/she dies while still in service. The family pension is granted to the widow/widower. If there is no widow/widower, the family pension is offered to the children of a government servant, who entered in service in a pensionable establishment on or after January 1, 1964 but on or before December 31, 2003....Read More
How Does A Family Pension Work?
According to the Comptroller and Auditor General of India report, children up to the age of 25 can receive the family pension or until they are not married or have not started earning. Their monthly income should not be more than Rs 9000 plus the Dearness Allowance.
The employee has no control over the family pension as he is not required to contribute to it. This is because it is not the property of the deceased Pensioner. Therefore, the entitlement for family pension cannot be decided by succession certificate.
Family Pension Rules
According to the family pension rules, the Pensioner must decide who will receive the family pension after their death.
To make it easier for you to understand, we have listed the family pension rules below
1. Eligibility for spouse
- Family pension is payable to widow or widower up to the date of death or re-marriage, whichever is earlier.
- The family pension will continue to be paid to a childless widow on re-marriage if her income from all other sources is less than the minimum of the family pension.
2. Eligibility for children
- Family pension to the children will be paid in the order of their birth. The younger of them will not be eligible for family pension unless the elder next or above them has become ineligible for the grant of family pension.
- Where the family pension is payable to twins, it will be paid to them equally.
- In the case of an unmarried son, the family pension will be payable until he turns 25 years of age or gets married or until he starts earning his livelihood, whichever is the earliest.
- If both the wife and husband are eligible to the provisions of the family pension 1964, the surviving child or children can be granted the family pension.
- A child adopted by the Pensioner’s spouse cannot be treated as the family member of the deceased Pensioner.
Family Pension Rules After Death of Pensioner
According to the rules laid down by the Department of Pension and Pensioner’s Welfare (DoPPW), there are some guidelines on how the family pension is disbursed to the family members of the Pensioner after their demise.
Here is a step by step guide on how one can claim pension after the death of a pensioner-
- You have to approach the pension paying bank along with the Pensioner’s half of the PPO (Pension Payment Order) and Death certificate.
- The manager will tell you everything about the procedure followed in that branch.
- If the Pensioner has a joint account with the spouse, they will have to submit the death certificate and a simple application to activate the pension. However, if the Pensioner does not have an account, they will have to open a bank account in that branch.
- The bank will verify the identity of the family members by demanding their Aadhar card, Pan Card and a joint photograph.
- The bank will update the date of death to activate the pension plan. Half of the Pensioner’s PPO will be returned to the spouse.
- After completing all the formalities, the bank will intimate the CPPC and start crediting the pension to the family member’s bank account.
Family Pension Rules For Central Government Employees
As per the rules laid by the Indian government, the family pension shall be calculated at a uniform rate of 30% of basic pay in all cases and shall be subject to a minimum of 3500/-pm and a maximum of 30% of the highest salary in the government.
It is essential to understand your risk-taking ability in terms of age, income source, and more considerable expenses such as a child’s education, loans, and marriage.
When you are nearer to retirement, the focus should be on availing of the benefits from the assets acquired over time. You can enjoy them in the form of a monthly income or a lump-sum amount on retirement.
Family Pension Rules For Widow Daughter
If a widowed daughter wants to claim a family pension, she should be 25 years of age or up to her marriage/re-marriage date or should be earning her livelihood, whichever is earlier.
Family Pension Rules For A Disabled Son
Suppose the son of a government servant is suffering from any disorder or disability in mind or is physically crippled or disabled so that he cannot earn a living. In that case, the family pension will be payable to such a son throughout his life. The main thing to note is that the family pension to a child suffering from a disability or disorder of mind is paid through a legal guardian.
Difference Between Pension And Family Pension
The major difference between a pension plan and a family pension is that the pension plan is a benefit that an employee receives after retiring. However, in the case of the family pension, the retirement benefit is passed on to the family members after the death of the Pensioner.
Family Pension Taxability
Family pension received by a family member of the Pensioner is taxed under the category “Income from other sources.” Family pension exemptions on un-commuted pensions are set to a maximum of ₹15,000 or a third of the pension received - whichever is lower.
The primary benefit of the commuted pension is that you get lump-sum amounts. You can then use them based on your needs while claiming tax benefits. When filing their tax returns, family members receiving pension payments must report them under the ‘Any other income earned' in the sources scheduled in Income Tax Return 2 (ITR 2).
There are two types of pensions-
1. Commuted pension: Payment of the pension as a lump sum amount
2. Uncommuted pension: pension income is paid monthly
Differences Between Uncommuted Pension Taxability And Commuted Pension Taxability
Uncommuted pensions or periodical family pension payments are fully taxable as they fall under their income. Family pension exemptions apply to commuted pensions or lump sums for some cases.
Employees of the government enjoy tax-exempted commuted pensions while non-government employees are partially exempted. A third of the amount is tax-exempted if you get a gratuity with the monthly allowance, while the remaining is part of taxable income. If it is only the monthly pension, then half the amount is tax-exempted. In both cases, it should be 100% of the pension being commuted.
Frequently Asked Questions
With effect from 1st January 2006, pension is calculated at 50 percent of the last salary drawn or an average of the previous 10 months, whichever is suitable for the government employee.
Government office or department in which the employee served.
According to rule 48, an employee working in a government organisation can retire after serving a minimum of 30 years. And under section 48A, they can apply for voluntary retirement after serving for 20 years.
No, a pensioner’s family member cannot open a bank account in any other bank. The account has to be opened in the bank as per the list of banks in the respective state. For more information, you can check out the Central Pension Accounting Office website-http://www.cpao.nic.in/
If the Pensioner dies, the widow/widower or his children can claim family pension by submitting form 14 along with the death certificate of the Pensioner to the Pension Disbursing Authority.
Family pension is not available to the widow/ widower after re-marriage. However, it is available to a childless widow if she cannot sustain herself through her livelihood.
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