Executive Directors Now Covered Under General Insurance Pension Scheme
The General Insurance Pension Scheme has been extended to include Executive Directors of public sector general insurers, as per a recent clarification by the Department of Financial Services (DFS), Ministry of Finance. This update ensures parity in post-retirement benefits for senior management and aims to resolve long-standing ambiguity in pension eligibility.
What Is the General Insurance Pension Scheme?
The General Insurance (Employees) Pension Scheme, 1995, framed under Section 17A of the General Insurance Business (Nationalisation) Act, 1972, was introduced via Notification No. GSR 527(E) dated 28.06.1995. It grants pension benefits to full-time employees of public sector general insurers.
Until now, there was uncertainty over whether Board-level appointees, particularly Executive Directors (EDs), were entitled to benefits under this scheme.
Key Update: Inclusion of Executive Directors
As per Office Memorandum No. 11015/04/2023-Ins.II dated 17.07.2025, the Ministry of Finance has clarified:
“Executive Directors in public sector general insurance companies shall be considered as employees under the 1995 Pension Scheme, subject to terms of appointment and Board approval.”
Why This Matters
Before the Clarification:
- Only non-board employees were explicitly eligible.
- Executive Directors and CMDs had no uniform post-retirement pension access.
- This caused disparities in benefits at the leadership level.
After the Clarification:
- Executive Directors get inclusion under the same pension regime.
- Ensures financial security post-retirement.
- Aligns with government’s intent to provide equitable treatment to all senior management in PSUs.
Eligibility Conditions for Executive Directors
To claim pension under the 1995 Scheme:
- The appointment order must not exclude pension benefits.
- The Board of Directors must formally approve inclusion.
- The ED must have completed minimum qualifying service (usually 10 years).
- Must comply with Rule 2(e) and Rule 3 of the Scheme.
Legal & Policy Basis
| Provision | Description |
|---|---|
| GSR 527(E) | Original notification of the Pension Scheme |
| Section 17A, GIBNA Act, 1972 | Grants Central Government power to formulate schemes |
| OM dated 17.07.2025 | Clarifies pension entitlement for Executive Directors |
| Case Law: LIC v. R. Seshadri (SC) | Reinforces Board-approved post-holding benefits as valid |
Practical Tip: Review Appointment Letters
If you’re a retired or retiring Executive Director of a PSU general insurer:
✔ Check if your appointment letter mentions or excludes pension
✔ Ensure Board approval is on record
✔ Coordinate with HR/Board Secretariat to process pension claims
✔ Consult a professional if there’s ambiguity in service terms
Frequently Asked Questions (FAQs)
Q1: Does this cover CMDs as well?
No. The clarification is limited to Executive Directors. CMDs remain governed by separate Presidential Appointments.
Q2: Is this applicable retrospectively?
Yes, if the ED’s appointment terms were silent on pension exclusion and Board approval is available.
Q3: What about those appointed on contract?
Contractual EDs are not automatically eligible unless explicitly covered in terms of appointment and Board resolutions.
Summary
The Finance Ministry has clarified that Executive Directors in PSU general insurance companies are now eligible under the General Insurance Pension Scheme, 1995, subject to Board approval and appointment terms.
Final Word
This move by the Ministry of Finance ensures pension parity and retirement security for senior management in PSU general insurers. It resolves a key ambiguity in employee benefits law and aligns with evolving best practices in public sector governance.
For help in reviewing pension eligibility, retirement benefits, or filing representation with PSU boards, reach out to Efiletax — your trusted partner in financial and compliance services.