Railway Board Issues New Rules for Gratuity Under NPS: Major Update for Post-2004 Employees – RBE No. 121/2025

Railway Board Issues New Rules for Gratuity Under NPS: Major Update for Post-2004 Employees – RBE No. 121/2025

Ministry of Railways has officially introduced the Railway Services (Payment of Gratuity under National Pension System) Rules, 2025, marking a significant development for railway employees appointed on or after January 1, 2004.

Railway Board released the order through RBE No. 121/2025 on 28 November 2025, confirming that the notification was published in the Gazette of India on 14 November 2025 under G.S.R. 852(E).

These new rules ensure that railway employees covered under the National Pension System (NPS) will now receive gratuity benefits, a demand repeatedly raised by staff organizations since NPS replaced the old pension scheme in 2004.

The rules are deemed to have come into effect from the very date NPS was implemented, giving them retrospective applicability.

The provisions apply to all railway servants substantively appointed on or after 01.01.2004 and governed by the Railway Services (Implementation of NPS) Rules, 2025.

However, there is a key exemption for employees who die while in service, are permanently disabled and boarded out, or retire on invalidation.

If such employees opted for pensionary benefits under the Railway Services (Pension) Rules, 1993 or Extraordinary Pension Rules, 1993, their gratuity will continue to be paid as per those earlier rules.

The notification also includes detailed definitions for terms such as qualifying service, average emoluments, head of office, and government dues, along with the authorities responsible for processing and approving gratuity claims.

With more than half of the existing workforce now under NPS, this move is being viewed as a major financial and social security reform within the Indian Railways. It addresses the long-standing concern that NPS employees faced uncertainty regarding retirement benefits compared to their pre-2004 counterparts.

The order was issued by the Director Finance (Estt.) G. Priya Sudarsani has been circulated to all Zonal Railways, Production Units, RDSO, and NAIR for immediate compliance.

Railway administrations across India will now begin implementing these rules, ensuring that eligible employees benefit from the newly defined gratuity structure.