5 RBI Directives Every Government Pensioner Must Know

Are you a government pensioner? Keep these 5 RBI directives in mind if you want to avoid any pension-related problems.

On July 2^nd, 2018, the Reserve Bank of India (RBI) released a master circular putting forth several directives to pension-disbursing banks with regards to senior citizen government pensioners. These new directives by the RBI aims to reduce the time and effort spent by government pensioners in getting their pension-related woes sorted.

Click to get your customised Mutual Fund portfolio

So, if you’re a government pensioner, you may want to keep the following five RBI directives in mind:

• Receiving pension in a joint account

Already retired or about-to-retire government employees can get their pension credited to a joint account. However, this joint account needs to be operated with their spouse who has been authorised for the same in the Pension Payment Order or PPO.

In other words, the pensioner cannot have his or her pension credited only to a joint account held along with his/her spouse who has been nominated to receive the family pension in case of the pensioner’s demise.

The joint savings account can be operated either as ‘Former or Survivor’ or ‘Either or Survivor’. The terms and conditions associated with operating the joining account is as follows:

• Post credit of pension in the account, neither the government nor the bank can be held responsible for any wrong amount withdrawals by the pensioner’s spouse.
• In case of death of the pensioner, the bank must be notified within a month. If pension was credited to the joint account post the death of the pensioner, the bank has the right to recover the same from the joint account or any other account held by the pensioner or spouse, either jointly or individually. Legal heirs are also liable to refund any excess pension credited wrongly.
• In case of any pension arrears, the bank will credit the same to the joint account.
• Post the pensioner’s death, the bank cannot ask the pensioner’s spouse to open a new account to receive the family pension. The spouse can choose to receive the same in the existing joint account.

Additional Reading: Latest Updates About The Atal Pension Yojana

• PPO number to be recorded in the pensioner’s bank’s passbook

In an attempt to help pensioners avoid problems arising from the loss of their original PPO, the RBI has asked banks to record the pensioner’s PPO number in the bank account in which their pension is credited.

The PPO is a vital document for government pensioners since it is mandatory to quote this number when they submit their life certificate (which usually takes place every year in November). Failure to submit the life certificate can lead to stoppage of their pension.

PPO is also important when transferring pension from a bank or branch to another, or while starting family pension in the unlikely case of the pensioner’s death.

If your PPO number has not been recorded in your account, you must get in touch with your pension-paying bank as soon as possible.

• Changes in PPO to be recorded & issuance of pension slips

Any changes in the pension or dearness allowance (DA) credited to the pensioner or family pensioner must be intimated to them. In addition, the pension-disbursing bank must record any such changes, along with the effective date, in the pensioner’s PPO. So, if you’ve been notified of any change in your pension amount or DA, you must visit the bank with your PPO copy and get it updated. This will help you keep a track of the increase in your pension along with the effective dates.

Also, the central government and state governments will be issuing pension slips whenever there is a change in the pension amount. Pensioners can collect these slips from their pension-disbursing banks.

Additional Reading: New Investor Friendly Features Of The National Pension System

• Nomination of heirs for pension arrears

It is mandatory for government pensioners to nominate heirs to receive their pension arrears, if any, in case of their demise. Nominations can be done using Form A or B. Form A should be used if you’re making a new nomination. However, if you’re making changes to your existing nomination, then you should use Form B.

• Reduction in time to process higher DA

The RBI has specifically instructed banks to reduce the delay between the issue of order towards increase in dearness allowance (DA) and its payment. This directive is indeed a huge relief to pensioners who earlier had to wait for six months or more to get higher pension.

Unlike before, the RBI has asked authorised pension-paying banks to act on the copies provided by the government to their respective head offices/regional offices instead of waiting for further instructions from them. In short, the pension-paying banks will have to ensure timely and accurate government pension disbursements to the eligible pensioners.

Additional Reading: Are Mutual Fund Retirement Plans Suitable For You?

Psst! Did you know that Mutual Funds can help you save some extra bucks for your golden years, over and above your pension? Start investing today!