Modi 3.0 Grants Compassionate Allowance. Know Here What it is and Who Is Eligible
Rounaq Neroy
Oct 25, 2024 / Reading Time: Approx. 4 mins
Listen to Modi 3.0 Grants Compassionate Allowance. Know Here What it is and Who Is Eligible
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The Modi 3.0 government has been taking some considerate measures in the interest of pensioners or retirees at large.
In the full Union Budget 2024-25 presented in July 2024, finance minister Ms Nirmala Sitharaman, enhanced the deduction for family pension (under Section 57 of the Income Tax Act, 1961) to Rs 25,000 from the earlier Rs 15,000 (effective from Assessment Year 2025-26, applicable to the Financial Year 2024-25).
Similarly, the standard deduction for salaried individuals and pensioners was also increased from Rs 50,000 to Rs 75,000 for AY 2025-26.
Further, the provision of a tax rebate under Section 87A, for individuals whose income does not exceed a specific threshold (Rs 5 lakh in the case old tax regime and Rs 7 lakh for the new tax regime) continued.
In August 2024 the government approved the Unified Pension Scheme (UPS), allowing the central government employees a fixed pension (a defined benefit).
[Read: All You Need to Know About the Unified Pension Scheme]
In September 2024 the government also approved the Centralised Pension Payments System (CPPS) -- a national-level centralised system for pension disbursement -- making a paradigm shift from the existing pension disbursement system that is decentralised.
[Read: How a Centralised Pension Payment System Shall Benefit Pensioners]
And now recently, to grant of additional pension to the retired central government civil employees covered under Central Civil Services (Pension) Rules, 2021 has introduced 'compassionate allowance' under the admissible rules, which is in addition to the usual pension.
The rationale behind offering a 'compassionate allowance' is to assist very senior pensioners in managing the rising cost of living often associated with ageing.
Who Is Eligible for Compassionate Allowance?
Central government pensioners of the age of 80 years and above will be eligible for an additional 'compassionate allowance' in addition to their pension.
How the Compassionate Allowance Will Be Paid?
The 'compassionate allowance' payable, which is a supplementary benefit, will depend on the age group of the pensioner as under:
| Age of pensioner |
Additional Pension/ Additional Compassionate Allowance |
| From 80 years to less than 85 years |
20% of basic pension/compassionate allowance |
| From 85 years to less than 90 years |
30% of basic pension/compassionate allowance |
| From 90 years to less than 95 years |
40% of basic pension/compassionate allowance |
| From 95 years to less than 100 years |
50% of basic pension/compassionate allowance |
| 100 years or more |
100% of basic pension/compassionate allowance |
Source: Office Memorandum of Ministry of Personnel, PG & Pensions
Department of Pension & Pensioners' Welfare, Government of India.
The aforesaid 'compassionate allowance' to the central government pensioners shall be payable from the first day of the calendar month in which it falls due.
For example, a pensioner born on 20th August 1942 shall be eligible for additional pension at the rate of 20% of the basic pension with effect from 1st August 2022.
A pensioner born on 1st August 1942 shall also be eligible for additional pension at the rate of 20% of the basic pension with effect from 1st August 2022.
How Will It Be Complied?
The Department of Pension & Pensioners' Welfare (DOPPW) has requested all ministries/departments and the pension disbursing authorities/ banks to bring it to the notice of all concerned for compliance.
To conclude...
If you are a very senior pensioner of the central government reading this or have family members who have served in the central government services who are now 80 years and above, do note that now on a 'compassionate allowance' shall be payable.
This is a remarkable and compassionate move that shall add to social security and be a relief for very senior pensioners facing rising costs of living.
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ROUNAQ NEROY heads the content activity at PersonalFN and is the Chief Editor of PersonalFN’s newsletter, The Daily Wealth Letter.
As the co-editor of premium services, viz. Investment Ideas Note, the Multi-Asset Corner Report, and the Retire Rich Report; Rounaq brings forth potentially the best investment ideas and opportunities to help investors plan for a happy and blissful financial future.
He has also authored and been the voice of PersonalFN’s e-learning course -- which aims at helping investors become their own financial planners. Besides, he actively contributes to a variety of issues of Money Simplified, PersonalFN’s e-guides in the endeavour and passion to educate investors.
He is a post-graduate in commerce (M. Com), with an MBA in Finance, and a gold medallist in Certificate Programme in Capital Market (from BSE Training Institute in association with JBIMS). Rounaq holds over 18+ years of experience in the financial services industry.
Disclaimer: This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes. Use of this information is at the user's own risk. The user must make his own investment decisions based on his specific investment objective and financial position and use such independent advisors as he believes necessary.