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Pay fixation on re-employment

How pay is fixed when a central government pensioner is re-employed: entry pay of the new post, pension ignored or deducted, under the CCS Orders of 1986.

Updated 17 July 2026 · Reviewed by Salary-Calculator.in

Pay fixation on re-employment is the set of rules that decides what pay a central government pensioner draws when they are taken back into a government post after retirement. The governing idea is narrow and specific: the re-employed pensioner is placed in the pay level of the new post, their pay is fixed at the entry pay of that level, and the part of their pension that is not ignored is then deducted from that pay. This is known as the pay minus pension principle, and it is what stops a re-employed pensioner from drawing the full pay of the new post and the full pension at the same time.

The rules matter because re-employment is common, especially for ex-servicemen who retire young and for specialist retirees brought back on contract or against regular posts. They are also frequently misunderstood, because they differ sharply from deputation , where pay is broadly protected. This article explains how the initial pay is fixed, the pay minus pension principle, which categories have their entire pension ignored and which have only the first Rs. 15,000 ignored, the treatment of dearness allowance , the definition of pension used, and the governing orders.

The basic rule: pay in the new post only

A re-employed pensioner draws pay only in the pay level of the post in which they are re-employed. There is no protection of the pay scale or level they held before retirement. The CCS (Revised Pay) Rules, 2016 attach a level of the pay matrix to every post, and the re-employed pensioner is placed in that level, exactly as a fresh appointee would be.

The initial pay in that level is fixed at the entry pay applicable to a direct recruit appointed on or after 1 January 2006, that is, at the minimum cell of the level. In this respect a re-employed pensioner starts where a new entrant to the post starts, not where their own career left off.

Pay minus pension: the core principle

Having fixed the pay in the level of the re-employed post, the rules then set the pension off against it. The non-ignorable part of the pension is deducted from the pay so fixed. The pensioner still receives the pension separately, but the re-employed pay is reduced by the part of the pension that is not ignored. This is the pay minus pension principle.

The point of the deduction is that the pension is deferred pay for past service, and the state does not intend a re-employed pensioner to be paid twice over for the same period once through the pension and again through the full pay of the new post. How much is deducted depends entirely on how much of the pension is ignored, and that turns on the category of the pensioner.

Whose pension is ignored, and by how much

The rules draw a sharp line between categories.

Entire pension ignored

For two groups the entire pension and the pension equivalent of retirement benefits is ignored, so nothing is deducted from the pay on this count:

  • civilians who held posts below Group A and who retired before attaining the age of 55; and
  • ex-servicemen who held posts below commissioned officer rank, that is, personnel below officer rank, often called PBOR.

For these groups, however, the initial pay is fixed at the minimum entry pay of the level, without regard to the pay they last drew before retirement. So although their pension is fully protected, their re-employed pay starts at the bottom of the level, which is a long-standing grievance among re-employed ex-servicemen.

First Rs. 15,000 of pension ignored

For commissioned officers and for civilian pensioners who held Group A posts, only a slice of the pension is ignored. Under the 7th CPC the ignorable amount is the first Rs. 15,000 of the pension, raised from the earlier Rs. 4,000 that applied under the 6th CPC. Only the pension above Rs. 15,000 is deducted from the pay fixed on re-employment. So a Group A pensioner drawing a pension of Rs. 50,000 has Rs. 35,000 deducted, being Rs. 50,000 less the ignored Rs. 15,000, rather than the whole pension.

The higher ignorable limit under the 7th CPC improved the position of officers and Group A retirees, because a larger part of the pension is left untouched and the re-employed pay is reduced by less.

What counts as pension

The word pension in these orders is defined widely. It means the gross monthly pension together with the pension equivalent of the death-cum-retirement gratuity, the pension equivalent of other gratuity or the government’s contribution to a contributory provident fund, and any other retirement benefit. Where the pension has been commuted in whole or in part, pension for this purpose means the gross pension before commutation, so a pensioner cannot reduce the deduction by having commuted a part of the pension. This wide definition ensures the deduction is worked out on the full value of the retirement benefits, not merely the reduced pension actually received in the hand.

Dearness allowance and other allowances

Dearness allowance on re-employment is drawn on the re-employed pay, that is, on the pay fixed in the level of the new post, exactly as for a serving employee. It is not calculated on the pension. The pension itself continues to attract its own dearness relief as a pensioner benefit, quite separately. The two are not merged: the re-employed pay draws serving-employee dearness allowance, and the pension draws pensioner dearness relief. Other allowances attached to the re-employed post, such as house rent allowance and transport allowance, follow the re-employed pay in the ordinary way.

Re-employment is not deputation

It is easy to confuse re-employment with deputation , but they are opposite in their pay treatment. A deputationist is a serving employee lent to another post, and their pay in the parent cadre is broadly protected, often with a deputation duty allowance on top. A re-employed pensioner has already retired, is drawing a pension, and gets no protection of pre-retirement pay: they start at the entry pay of the new post and have the non-ignorable pension deducted. The distinction also separates re-employment from an ordinary pay fixation on promotion , which concerns a serving employee moving up, not a pensioner returning to service.

Why the rules matter in practice

For a pensioner weighing a re-employment offer, the pay fixation rules decide whether the offer is worth taking. A Group A officer with the first Rs. 15,000 of pension ignored can find re-employment financially attractive, because a large part of the pension survives the deduction and the re-employed pay is drawn largely on top of it. A retired PBOR, by contrast, has the whole pension protected but the re-employed pay fixed at the bottom of the level, so the pay itself is modest. The rules also feed into later liabilities: the re-employed service and pay do not usually add to the original pension , and the pay and pension together have their own income tax treatment for pensioners that a re-employed pensioner should work out before accepting.

Frequently Asked Questions (FAQs)

How is pay fixed when a pensioner is re-employed?
A re-employed central government pensioner draws pay only in the pay level of the post they are re-employed in, with no protection of the pay they drew before retirement. The initial pay is fixed at the entry pay of that level applicable to a direct recruit appointed on or after 1 January 2006. From this pay the non-ignorable part of the pension is then deducted, which is the pay minus pension principle. This is governed by the CCS (Fixation of Pay of Re-employed Pensioners) Orders, 1986, as amended for later pay commissions.
What is the pay minus pension rule?
The pay minus pension rule is the way a re-employed pensioner’s pension is set off against the pay fixed on re-employment. After the initial pay is fixed in the level of the re-employed post, the part of the pension that is not ignored is deducted from that pay, so the pensioner does not draw the full re-employed pay and the full pension at the same time. The pensioner still receives the pension separately, but the pay is reduced by the non-ignorable part of it.
How much pension is ignored for re-employed pensioners?
It depends on the category. For civilians who held posts below Group A and retired before the age of 55, and for ex-servicemen who held posts below commissioned officer rank, the entire pension is ignored, so nothing is deducted from the pay, but their pay is fixed at the minimum entry pay of the level. For commissioned officers and Group A pensioners, the first Rs. 15,000 of the pension is ignored under the 7th CPC, up from Rs. 4,000 earlier, and only the pension above Rs. 15,000 is deducted.
Can a re-employed pensioner draw both pay and pension?
Yes, a re-employed pensioner continues to draw the pension in addition to the pay of the re-employed post, but the two are linked by the pay minus pension rule. The non-ignorable part of the pension is deducted from the pay fixed on re-employment, so the total is not simply pay plus full pension. Where the entire pension is ignored, the pensioner draws the pension and the re-employed pay without any deduction on this count.
Is dearness allowance paid on the re-employed pay or the pension?
Dearness allowance on re-employment is paid on the pay fixed in the level of the re-employed post, treated like the pay of any serving employee. The pension carries its own dearness relief separately as a pensioner benefit. The two are not combined for the purpose of dearness allowance, so the re-employed pay draws serving-employee dearness allowance while the pension draws pensioner dearness relief.
Which orders govern pay fixation on re-employment?
The consolidated rules are the CCS (Fixation of Pay of Re-employed Pensioners) Orders, 1986, issued by the Department of Personnel by Office Memorandum No. 3/1/85-Estt.(Pay-II) dated 31 July 1986. They were amended for the running pay bands and grade pay of the 6th CPC by DoPT OM No. 3/19/2009-Estt.(Pay-II) dated 5 April 2010 and 8 November 2010, and updated for the 7th CPC pay matrix, including the Rs. 15,000 ignorable limit, by DoPT OM No. 3/3/2016-Estt.(Pay-II) dated 1 May 2017.
Does a re-employed pensioner keep their old pay scale?
No. A re-employed pensioner does not carry forward the pay scale or level they held before retirement. They are placed in the pay level attached to the re-employed post and their initial pay is fixed at the entry pay of that level for a direct recruit. The pre-retirement pay is not protected, which is one of the main features distinguishing re-employment from deputation, where the pay of the parent post is broadly protected.

External references

References

  1. CCS (Fixation of Pay of Re-employed Pensioners) Orders, 1986, issued by the Department of Personnel and Administrative Reforms, Office Memorandum No. 3/1/85-Estt.(Pay-II) dated 31 July 1986, consolidating the earlier scattered Ministry of Finance orders on fixation of pay of re-employed pensioners.
  2. Department of Personnel and Training, Office Memorandum No. 3/19/2009-Estt.(Pay-II) dated 5 April 2010, and dated 8 November 2010, amending the 1986 Orders for the running pay bands and grade pay of the CCS (Revised Pay) Rules, 2008: initial pay fixed at the entry pay of the re-employed post applicable to a direct recruit appointed on or after 1 January 2006, with no protection of pre-retirement pay, and the non-ignorable part of pension deducted.
  3. Department of Personnel and Training, Office Memorandum No. 3/3/2016-Estt.(Pay-II) dated 1 May 2017, updating the fixation of pay of re-employed pensioners for the 7th CPC pay matrix, including the ignorable pension limit of Rs. 15,000 for commissioned officers and Group A pensioners.
  4. CCS (Fixation of Pay of Re-employed Pensioners) Orders, 1986, definition of pension: gross monthly pension and the pension equivalent of death-cum-retirement gratuity and other retirement benefits, and, where pension has been commuted, the gross pension before commutation.
  5. Seventh Central Pay Commission Report and consequential Department of Expenditure orders on the pay structure of the pay matrix into which re-employed pensioners are fixed.