Understanding family pension
The family pension is money given to the family of a government employee if he or she dies while still in service. The widow/widower receives the family pension. If there is no widow/widower, the family pension is available to the offspring of a government employee who began working in a pensionable establishment on or after January 1, 1964.
However, the date of joining must be on or before December 31, 2003, or you must have joined the organization before that date.
What Is The Process of Creating a Family Pension?
According to a study by the Comptroller and Auditor General of India, children up to the age of 25 may receive the family pension, or until they marry or begin working. Their monthly earnings should not exceed Rs 9000 + Dearness Allowance.
Because he is not compelled to contribute to the family pension, the employee has no say over it. This is due to the fact that it is not the dead Pensioner’s property. As a result, the right to a family pension cannot be determined by a succession certificate.
Family Pension Regulations
The Pensioner must pick who will get the family pension after their death, according to the requirements of the family pension.
We have provided the family pension regulations below to make it simpler for you to grasp.
1. Spouse Eligibility
A family pension is payable to a widow or widower until death or remarriage, whichever comes first.
If a childless widow remarries, the family pension will continue to be paid if her income from all other sources is less than the minimum of the family pension.
2. Children’s Eligibility
- The children’s family pension will be paid in the order of their birth. The younger of them will be ineligible for family pension unless the older next or above them becomes ineligible for family pension.
- If a family pension is payable to twins, it will be split evenly between them.
- In the instance of an unmarried son, the family pension will be paid until he reaches the age of 25, marries, or begins earning a living, whichever comes first.
- If both the woman and husband are qualified for the family pension provisions of 1964, the surviving kid or children may be given the family pension.
- A kid adopted by the Pensioner’s spouse is not a family member of the dead Pensioner.
What Are The Rules For a Family Pension?
According to the Department of Pension and Pensioner’s Welfare (DoPPW) laws, there are certain criteria on how the family pension is given to the Pensioner’s family members after their death.
Here is a step-by-step guide to claiming a pension following the death of a pensioner:
1. You must go to the pension paying bank with the Pensioner’s portion of the PPO (Pension Payment Order) and the Death certificate.
2. The manager will tell you all you need to know about the process in that branch.
3. If the pensioner has a joint account with their spouse, they must provide a death certificate as well as a simple application to activate the pension. If the Pensioner does not already have a bank account, they must establish one at that branch.
4. The bank will verify the family members’ identities by requesting their Aadhar card, Pan Card, and a combined picture.
5. To activate the pension plan, the bank will change the date of death. The spouse will get half of the pensioner’s PPO.
6. Once all of the requirements are completed, the bank will notify the CPPC and begin crediting the pension to the family member’s bank account.
Rules Regarding Family Pensions for Central Government Employees
According to the Indian government’s guidelines, the family pension should be computed at a uniform rate of 30% of basic pay in all circumstances, with a minimum of 3500/-pm and a maximum of 30% of the highest income in the government.
It is critical to evaluate your risk-taking capacity in relation to your age, income source, and larger costs such as a child’s schooling, debts, and marriage.
When you get closer to retirement, you should concentrate on reaping the rewards of the assets you’ve amassed over time. You may take them as a monthly income or as a lump payment when you retire.
Rules For a Widow’s Daughter’s Pension
If a widowed daughter wishes to apply for a family pension, she must be 25 years old, or up to the date of her marriage/re-marriage, or be earning a living, whichever comes first.
Rules For A Disabled Son’s Family Pension
Assume the kid of a government employee suffers from a mental disease or impairment, or is physically crippled or incapacitated, making it impossible for him to make a livelihood. In such instance, the family pension will be paid to the son for the rest of his life. The essential point to remember is that the family pension for a kid with a handicap or mental disease is paid via a legal guardian.
What Is The Difference Between a Pension And a Family Pension?
The primary distinction between a pension plan and a family pension is that the pension plan is a benefit received by an employee after retirement. In the event of a family pension, however, the retirement benefit is passed on to family members following the Pensioner’s death.
Taxation of Family Pensions
A family pension received by a pensioner’s family member is taxed under the category “Income from other sources.” On uncommuted pensions, family pension exemptions are limited to a maximum of $15,000 or one-third of the pension received, whichever is less.
The fundamental advantage of a commuted pension is that you get lump-sum payments. You may then utilise them as needed when claiming tax breaks. Family members receiving pension benefits must record them on their tax returns under the ‘Any other income obtained’ section of Income Tax Return 2. (ITR 2).
Pensions are classified into two types:
1. Commuted pension: Payment of the pension in the form of a lump payment.
2. Uncommuted pension: the pension income is paid on a monthly basis.
Differences in Pension Taxability Between Uncommuted And Commuted Pension Taxability
Uncommuted pensions or periodic family pension payments are completely taxed since they are considered income. In certain circumstances, family pension exemptions apply to commuted pensions or lump amounts.
Employees of the government are immune from paying taxes on their commuted pensions, but non-government employees are only partly exempt. If you get a gratuity with your monthly allowance, one-third of the amount is tax-free, while the remainder is taxable income. If it is merely the monthly pension, half of it is tax-free. In both circumstances, the pension should be commuted in its whole.
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Questions and Answers (FAQs)
1. Who qualifies for a pension?
A government employee who joined an organisation on or before December 31, 2003 and retired after serving a minimum of ten years.
2. What is the formula for calculating a pension?
With effect from January 1, 2006, the pension is computed at 50% of the most recent pay taken or an average of the preceding ten months, whichever is appropriate for the government employee.
3. Who is the Pension Stipulation Authority?
The government agency or department where the individual worked.
4. Is there an online calculator that can be used to compute the updated pension?
A tool is accessible on the Department of Pension and Pensioners’ website to compute the amended pension.
5. Where can we get the pension/nomination forms?
All forms are available for download on the Department of Pensions and Pensioners’ website.
6. When is a government employee eligible to file for voluntary retirement?
Rule 48 states that an employee in a government organization may retire after serving for a minimum of 30 years. They may also apply for voluntary retirement after 20 years of service under Section 48A.
7. Can a pension account be created in any branch of a bank?
No, a pensioner’s family member is not permitted to establish a bank account with any other bank. The account must be established at a bank on the list of banks in the appropriate state. You may get further information from the Central Pension Accounting Office.
8. When is a family member eligible for a family pension?
If the Pensioner dies, the widow/widower or his children may apply for a family pension by submitting form 14 to the Pension Disbursing Authority together with the Pensioner’s death certificate.
9. Is a family pension accessible to a widow/widower who remarries?
After re-marriage, the widow/widower is no longer entitled to a family pension. It is, however, accessible to a childless widow who is unable to support herself via her work.
