Defence Pension Scheme

The Defence Pension Scheme in India is a retirement scheme for retired personnel from the Indian Armed Forces, their families, and civilian employees of Defence establishments. The Ministry of Defence manages this scheme, which aims to secure the livelihoods of defence personnel post-retirement.

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Disclaimer: ##Rs 60,000 are the monthly pension amounts at the assumed rate of return of 8% p.a. and 4% p.a. for unit linked insurance plans. This is an illustrative example and the returns are not guaranteed & dependent on the policy term and premium term availed along with the other variable factors. The market linked return of 60K per month is for an 18 year old investing 6k per month for 20 years in a whole life policy having policy term 82 years in which Systematic partial withdrawals start at the age of 65 years at 5% rate of withdrawal per year. The investment risk in the policy is borne by the policyholder. All Plans listed here are of insurance companies’ funds. *Tax benefits and savings are subject to changes in tax laws. All Plans listed here are of insurance companies’ funds. Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.

What is a Defence Pension Scheme?

Defence Pension Scheme is an initiative of the Government of India that provides a monthly pension and other benefits for the well-being of retired defence personnel from the Indian Army, Indian Navy, and Indian Air Force.

This pension plan benefits the following individuals:

Retired Commissioned Officers (minimum 20 years of service)
Retired Personnel Below Officer Rank (minimum 15 years of service)
Civilian employees working in Defence establishments
Families of deceased armed forces personnel

This army pension scheme recognizes the sacrifices and services rendered by military personnel in the defence of their nation.

Features of the Defence Pension Scheme

The key features of a defence/ army pension scheme's best investment options are as follows:

Features	Details
Launched By	Government of India
Administered By	Ministry of Defence
Beneficiaries	The scheme offers pensions to the following personnel and their families: Former officers who served at least 20 years. Former non-officer personnel who served at least 15 years. Civilians employed in defence facilities. Families of deceased military personnel.
Pension Benefits	Provides a regular defence/ army pension to retired military personnel based on: Rank Length of Service Other Criteria.
Disability Pension	Defence pension to ex-servicemen injured or disabled during their service in the armed forces.
Family Pension	Army/ Defence pension to the spouse or dependents of the retired personnel in case of their demise.
Gratuity	Provides a lump-sum payment in army/ defence as a gratuity to the veterans upon retirement.
Commutation	Allows the retired personnel to commute a portion of their defence/ army pension in exchange for a lump-sum payment in the army.
Medical Benefits	Provides medical benefits to retired personnel and their dependents under the Ex-Servicemen Contributory Health Scheme (ECHS).
Pension Revision	Offers periodic revision of pension to ensure that the pension amount keeps up with inflation

Types of Defence Pension Schemes

Let us have a look at the major types of defence pension schemes from the table mentioned below:

Type of Defence Pension Scheme	Details
Service Pension	-Minimum Pension: Rs. 9,000 per month lump sum payment in army/ defence -Maximum Pension: Provides a defence/ army pension at the higher of: 50% of the last drawn emoluments, or 50% of the last 10 months average emoluments -Eligibility Criteria: Minimum 20 years of service as a Commissioned Officer, or Minimum 15 years of service as a Personnel Below Officer Rank
Family Pension/ Vidhwa Pension	In case of absence of the personnel due to natural death, a pension to their family is provided at: 30% of last drawn emoluments Minimum pension of Rs. 9,000 per month
Special Family/ Vidhwa Pension	In case of death of the personnel attributed to/ aggravated by the Military Service: A regular special pension for their family is granted Provision of 60% of last drawn emoluments by the deceased veteran
Liberalized Family/ Vidhwa Pension	-A pension to the families of personnel killed in the following situations: War/ War like operations Counter-insurgency operations Encounter with terrorists, etc. -Pension Amount: Equal to the last drawn emoluments by the deceased personnel
Disability Pension	-Defence/ army pension in cases that were invalid due to a disability attributed to/ aggravated by Defence Service. -Elements of disability pension: Disability Element: -In proportion to the level of disability -Up to a maximum of 30% of last drawn emoluments if a complete disability -No disability element if the disability is less than 20%. Service Element: Retirement pension at 50% of last drawn emoluments.
War Injury Pension	Pension of War Injury Element is provided in case of 100% disability: Equal to last drawn emoluments for invalided cases 60% of last drawn emoluments for discharge cases Pension reduces in proportion to the disability
Invalid Pension	The pension for invalided cases due to disability is Neither Attributable Nor Aggravated (NANA) type: To all the Armed Forces Personnel who are in service from 04 January 2019* If the personnel is invalided out from service due to NANA-type bodily harm or mental infirmity and If permanently incapacitated from military service and re-employment in private
Reservist Pension	A pension is provided for: Completion of prescribed combined Colour and Reserve Service of at least 15 years Provides 2/3rd pension of minimum pension granted to a Sepoy

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*Note: The earlier criteria of a minimum of 10 years of service in the armed forces is not required from 16 July 2020.

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Defence Pension Regulations

The Indian Air Force, Navy, and Army pension rules under which the defence pension is provided are as follows:

Pension Regulations for the Army (PRA), 1961 [Revised PRA in 2008]
Pension Regulations for the Air Force, 1961
Navy (Pension) Regulation, 1964
Entitlement Rules for Casualty Pensionary Awards, 2008

Documents Required

The important documents required to join the Defence Pension Scheme are as follows:

Documents Required	Details
ID Proof	Passport/ Aadhar Card/ Driving License
Address Proof	Utility Bill/ Bank Statement/ Rent Agreement
Service Records	PPO
Bank Account Details	Bank Passbook/ Account Number/ IFSC Code/ Branch Name & Address
Nomination Form	Nominees Details

Benefits of the Defence Pension Scheme

The Defence Pension Scheme in India offers various benefits to retired personnel of the Indian Armed Forces and their families. Some of the key benefits are:

Regular Income

The defence/army pension scheme provides a regular income to retired personnel, ensuring financial security and stability for the pensioner and their family.
Inflation-Proof

The pension amount is adjusted periodically to account for inflation, ensuring it retains its purchasing power over time.
Medical Benefits

Under the Ex-Servicemen Contributory Health Scheme (ECHS), retired personnel and their dependents are eligible for various medical benefits, including medical facilities, hospitalization, and treatment expenses.
Housing Benefits

Retired personnel are eligible for various housing benefits, including allotment of houses, land, and loans for house construction, under various schemes, such as:
- Armed Forces Flag Day Fund
- Army Welfare Housing Organization (AWHO)
- Navy and Air Force Housing Boards
Travel Concessions

Retired personnel are eligible for various travel concessions, including free rail/ air/ bus travel, under various schemes such as the Indian Railways, Air India, and State Transport Undertakings.
Post-Retirement Benefits

Retired personnel are eligible for various post-retirement benefits, including:
- Canteen facilities
- Educational assistance to children
- Scholarships for higher education.

Wrapping It Up

The Defence Pension Scheme is a vital support system for the armed forces personnel and their families. It provides financial security to the retired or deceased members of the defence forces and their dependents through various defence/ army pension schemes.

Frequently Asked Questions

Who is eligible for a Defence Pension?

You are eligible for a Defence Pension if you are an ex-serviceman who served in the Indian Armed Forces (Army, Navy, Air Force) and meet the minimum service requirements (15 years for Personnel Below Officer Rank (PBOR), 20 years for Non-Combatants (Enrolled)).
How is the amount of my Defence Pension calculated?

Generally, your pension is 50% of your last drawn basic pay or the average of your last 10 months' basic pay, whichever is more beneficial.
What is a PPO (Pension Payment Order)?

The PPO is a document issued by the government that specifies your monthly pension amount, commutation amount (if applicable), and other details about your pension.
How can I access my Defence Pension information online?

The SPARSH (System for Pensions Accounting & Record Keeping in Services Headquarters) portal allows you to view your pension details and download your PPO.
What are my family's rights regarding my Defence Pension?

In case of your demise, your family might be eligible for a family pension. The eligibility and amount depend on factors like your service and your family's composition.
How can I apply for a Defence Pension?

Your defence/ army pension application is usually processed by your last serving unit before retirement.
What is the ECHS?

The Ex-servicemen Contributory Health Scheme (ECHS) is a health insurance scheme for ex-servicemen and their families. It provides medical facilities at polyclinics and empanelled hospitals.
How can I update my personal details for Defence Pension purposes?

You can update your details for defence/ army pension in India through your bank or the pension disbursing agency.
What if I have a question or problem with my Defence Pension?

You can contact the Central Pension Authorities (CPA) or your pension disbursing agency for assistance regarding your defence/ army pension in India.
What is the new pension scheme of Defence?

The new pension scheme for Defence personnel in India is known as the National Pension System (NPS). It is a defined contribution pension system, which was introduced in 2004 and applies to all new entrants to the Central Government service, including Defence personnel, who joined on or after January 1, 2004. Defence personnel who joined the service before January 1, 2004, are covered under the old pension scheme. This pension plan is based on the Pay Commission recommendations and the Defence Pension Regulations.
How much pension does a soldier get?
The defence/ army pension amount for a soldier in the Indian Armed Forces depends on several factors such as:
- length of service
- rank held
- last pay drawn
The pension amount is calculated based on a percentage of the last pay drawn, and this percentage varies based on the rank and length of service.
How much is the family pension for Defence?

The family pension provided under the Defence Pension Scheme varies depending on the rank and service of the deceased pensioner. The pension is calculated as a percentage of the pension that the pensioner would have received if they were alive. The rates of family pensions are revised from time to time based on the recommendations of the Pay Commissions.
How is the Defence pension calculated?
The pension calculation formula for Defence Pension Scheme varies based on the following two schemes:
- Old Pension Scheme
- Defence Pension= Average emoluments drawn in last 10 months of service × Percentage factor
- Percentage Factor (PF): Determined by the relevant Pay Commission Recommendation and Pension Regulations
- PF is determined based on the length of service and rank of the pensioner
- New Pension Scheme: National Pension System (NPS)
- Calculated based on the contributions made by the employee and the employer in the NPS, along with the investment returns generated by the pension fund
- Investment Options: Equities/ Government Securities/ Corporate Bonds

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^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
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¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
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