Family Pension Scheme

Understand the family pension scheme, including its eligibility, benefits, and calculation methods.
Explore plans
Check Life Insurance Policies
Get Quote
3 min
30-May-2025

The Family Pension Scheme provides financial support to the family members of an employee or pensioner after their demise. This scheme ensures that the dependents can maintain their standard of living and meet financial needs even in the absence of the primary breadwinner. It is a crucial component of retirement planning, complementing life insurance by offering a steady income to dependents. Schemes like the central government family pension rules, employee family pension scheme, and EPF family pension play significant roles in ensuring a secure future for families.

What is a family pension scheme?

A family pension is a regular monthly payment made to the surviving family members of a deceased government employee or pensioner. It acts as a financial safety net for the dependent family members, usually the spouse, children, or parents, helping them manage living expenses after the pensioner’s death. The goal of family pension is to ensure that the family is not left financially vulnerable due to the loss of the earning member. It is governed by specific rules set by the government and varies slightly depending on the employment sector (central, state, or public sector).

Types of family pension

Family pension plans come in different types based on employment sector, cause of death, and benefits offered. Here are the most common ones:

  • Basic family pension: This is the standard monthly pension provided to the spouse or eligible dependent after the death of the pensioner or employee. It ensures continued financial support for the family.
  • Enhanced family pension: Some employers or schemes offer a higher pension amount for a fixed period (like 7 years) after the employee’s death, usually if the death occurred during active service.
  • Employer-specific family pension: Many private companies and public sector undertakings (PSUs) offer family pension as part of their retirement benefits. The amount and tenure depend on the company policy.
  • EPFO Family Pension (under EPS): Employees enrolled in the Employees’ Pension Scheme (EPS 1995) are eligible for a family pension. On their death, the spouse or children receive a monthly pension, subject to EPFO rules.
  • Insurance-based family pension: Life insurance policies or pension plans with survivor benefits provide family pensions when the policyholder passes away. The payout is either monthly income or lump sum depending on plan terms.

How does a family pension work?

Family pension works by continuing a portion of the pension that the deceased would have received, and is paid monthly to the eligible dependent. It’s typically calculated as a percentage of the last drawn salary or basic pension of the deceased employee. The pension is processed and disbursed by the relevant government department or pension disbursing authority.

The pension amount and duration depend on the family pension rules, the type of employment, and the eligibility of the family member. The spouse is usually the first eligible recipient, followed by children or dependent parents. The amount is credited directly to the beneficiary’s bank account upon approval.

Key benefits of the family pension scheme

The Family Pension Scheme offers several financial and emotional benefits, ensuring dependents feel secure during challenging times.

  • Steady income:
    Provides a regular income to maintain the family’s financial stability after the demise of the breadwinner.
  • Support for children:
    Covers educational and other essential expenses for children.
  • Inclusive eligibility:
    Extends to various family members, including dependent parents and disabled children, under specific rules like the central government family pension rules.

These benefits highlight the importance of combining pension schemes with life insurance to provide long-term financial security. When paired with life insurance, it ensures comprehensive protection for families.

What are the limitations of family pension scheme?

While family pension offers financial support, it has certain limitations. The amount received is usually lower than the pension drawn by the deceased, which might not fully cover all household expenses. Also, the benefit is limited to specific family members and stops under certain conditions. Despite these limits, family pension remains a crucial support for many families.

Who is eligible for a family pension?

Eligibility for family pension is defined under government rules and generally includes:

  • Spouse: The widow or widower is the primary beneficiary and receives the pension until death or remarriage (in some cases).
  • Children: Unmarried sons (up to age 25) and unmarried or widowed daughters are eligible. If the child is disabled, the age limit does not apply.
  • Dependent parents: In cases where no spouse or children are eligible, dependent parents can receive the family pension.
  • Divorced or legally separated spouses: Depending on specific conditions and judgments, they may also be eligible.

Family pension is meant to provide steady support to immediate dependents, but the order of preference and conditions may vary depending on the nature of the service and specific family pension rules. It’s essential to refer to your employer or government authority’s latest guidelines to confirm eligibility.

Eligibility criteria for family pension scheme

Eligibility for the Family Pension Scheme depends on the specific rules outlined by the employer or the government. Typically, it is available to the spouse, minor children, and dependent parents of the deceased employee or pensioner. In some cases, disabled children and unmarried daughters above a certain age may also qualify.

For instance, the central government family pension rules specify that only one family member can receive the pension at a time. If the primary beneficiary, such as the spouse, passes away or becomes ineligible, the next eligible family member, like a child, may begin receiving the pension.

Pro Tip

Create wealth and meet your financial goals with a ULIP investment plan, start investing from Rs. 3,000/month.

health-insurance-banner

Rules for family pension after the death of a pensioner

Here are the key family pension rules to know:

  • Immediate notification: The family must notify the pension disbursing authority (PDA) or bank about the death of the pensioner.
  • Submission of death certificate: A copy of the death certificate must be submitted along with the family pension application.
  • Eligibility hierarchy: The spouse is first in line, followed by eligible children or dependent parents.
  • Age restrictions: Children must be under 25 to receive pension unless they are disabled.
  • Remarriage clause: In some cases, family pension may stop if the spouse remarries (particularly for widowers).
  • Pension revision: Family pension may be revised or increased periodically based on government notifications.

These family pension rules ensure that the process remains transparent and that the rightful beneficiary receives timely support.

How to claim family pension after the pensioner’s death?

To initiate a claim, follow these steps:

  • Inform the pension disbursing authority or bank about the pensioner’s death.
  • Obtain and fill the family pension claim form from the respective office or website.
  • Attach required documents like death certificate, identity proof, and bank details.
  • Submit the application at the nearest pension office or bank branch.
  • Track application status using the acknowledgment or reference number.

The process may take a few weeks, but once approved, the family pension is credited directly to the nominee’s bank account.

Documents required to claim family pension

  • Death certificate
  • Identity and address proof
  • Pensioner’s PPO (Pension Payment Order)
  • Bank passbook or account details
  • Family pension claim form

How to apply for family pension scheme?

Applying for a family pension involves a straightforward process, but it requires careful documentation and adherence to guidelines.

Obtain a death certificate:

This is the primary document needed to initiate the claim process.

Submit an application:

Fill out the family pension application form provided by the employer or pension office.

Provide proof of eligibility:

Submit documents like the marriage certificate, birth certificates of children, and identity proofs.

Include the service records:

Attach the service record or pension account details of the deceased.

Complete verification:

After submission, the authorities will verify the documents and approve the pension.

Understanding the specific rules under the employee family pension scheme or EPF family pension is vital for a smooth application process.

How to calculate of family pension scheme amount?

The family pension amount is calculated based on the salary or pension of the deceased employee. It typically involves a fixed percentage of the last drawn salary or pension.

Basic calculation:

Family pension is usually set at 30% of the last drawn salary.

Minimum and maximum limits:

The scheme may specify minimum and maximum pension amounts based on government regulations.

Additional benefits:

Some schemes, like the EPF family pension, offer higher payouts if the employee contributed for an extended period.

Accurate calculation ensures dependents receive adequate support, helping them manage finances effectively.

What are the durations and conditions of family pension scheme?

The duration and conditions for receiving a family pension vary based on the scheme’s rules and the beneficiary’s category.

For spouses:

The pension continues until the spouse’s death or remarriage, depending on the scheme’s terms.

For children:

Minor children receive the pension until they reach adulthood or complete their education. Disabled children may receive it for life.

For parents:

Dependent parents are eligible if there are no surviving eligible spouses or children.

Conditions under schemes like the employee family pension scheme often provide extended support to families, ensuring they remain financially stable over the long term.

Taxation of family pension

Family pension received by the nominee is taxable under the "Income from Other Sources" category. However, under Section 57(iia) of the Income Tax Act, a standard deduction of one-third of the pension amount or Rs. 15,000 (whichever is lower) is allowed. This deduction reduces the taxable portion of the pension received.

For example, if a nominee receives Rs. 60,000 as annual family pension, they can claim a standard deduction of Rs. 15,000. Only the remaining Rs. 45,000 will be taxed. It’s important for recipients to report this income while filing taxes and retain documents like the bank statement or pension credit slips for reference.

Understanding the tax implications helps in better planning and reduces the chances of errors during tax filing.

Family pension vs regular pension: Key differences

Aspect

Family Pension

Regular Pension

Recipient

Surviving family members (spouse, children, parents)

Retired government employee or pensioner

Purpose

Financial support after pensioner's death

Retirement benefit after completing service

Amount

A percentage of the last drawn pay or basic pension

Based on last drawn salary and service duration

Tax treatment

Taxable under "Other Sources" with deductions

Taxable as salary income

Duration

Until the spouse remarries, children reach age limit, or death

Usually for the lifetime of the pensioner

Eligibility conditions

Based on family relationship and dependency

Based on employment and years of service

 

Conclusion

The Family Pension Scheme is a vital financial tool that ensures dependents are supported after the loss of a breadwinner. Whether governed by the central government family pension rules, the employee family pension scheme, or the EPF family pension, these plans provide much-needed stability. By integrating life insurance with a family pension plan, individuals can secure their family’s future comprehensively, offering both immediate and long-term protection.

Financial planning for dependents is not just about numbers but about ensuring peace of mind for loved ones. A well-structured family pension plan serves this purpose effectively, creating a safety net that sustains families during challenging times.

Frequently asked questions

Who is eligible for the Family Pension Scheme?
Spouses, minor children, dependent parents, and, in some cases, disabled children and unmarried daughters are eligible.

How long does the family receive the pension?
The duration depends on the beneficiary. Spouses may receive it for life, while children receive it until adulthood or completion of education.

Can children receive the family pension?
Yes, minor children are eligible, and disabled children may receive it for life under specific conditions.

What documents are needed for family pension?
Documents such as the death certificate, marriage certificate, children’s birth certificates, and service records of the deceased are required.

Is the pension amount fixed or variable?
The pension amount is usually fixed at a percentage of the last drawn salary, but schemes may specify minimum and maximum limits.

What is the main difference between pension and family pension?

Regular pension is given to retired employees; family pension is paid to their surviving dependents after death.

How is the family pension amount calculated?

It is usually a percentage of the last drawn salary or basic pension of the deceased government employee.

What is the minimum amount one can get as family pension?

The minimum family pension is decided by the government and is subject to periodic revision.

What is the payment rate under family pension schemes?

Typically, family pension is 30% of the last drawn salary, subject to minimum and maximum limits.

How long is family pension paid?

It continues until the spouse passes away or remarries; for children, it’s up to 25 years or longer if disabled.

Can family pension be transferred to another family member?

Yes, if the primary beneficiary is no longer eligible, it transfers to the next eligible dependent.

How long is family pension paid to children?

Usually until they turn 25, or for life if they have a certified disability.

Show More Show Less

Bajaj Finserv App for All Your Financial Needs and Goals

Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.

Explore and apply for co-branded credit cards online.

Invest in fixed deposits and mutual funds on the app.

Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.

Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.

Apply for Insta EMI Card and get a pre-approved limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on No Cost EMIs.

Shop from over 100+ brand partners that offer a diverse range of products and services.

Use specialised tools like EMI calculators, SIP Calculators

Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

Do more with the Bajaj Finserv App!

UPI, Wallet, Loans, Investments, Cards, Shopping and more

GET THE APP

Disclaimer

*T&C Apply - Bajaj Finance Limited (‘BFL’) is a registered corporate agent of third party insurance products of Bajaj Allianz Life Insurance Company Limited, HDFC Life Insurance Company Limited, Life Insurance Corporation of India (LIC), Bajaj Allianz General Insurance Company Limited, SBI General Insurance Company Limited, ACKO General Insurance Company Limited, HDFC ERGO General Insurance Company, TATA AIG General Insurance Company Limited, ICICI Lombard General Insurance Company Limited, New India Assurance Limited, Chola MS General Insurance Company Limited, Zurich Kotak General Insurance Company Limited, Star Health & Allied Insurance Company Limited, Care Health Insurance Company Limited, Niva Bupa Health Insurance Company Limited, Aditya Birla Health Insurance Company Limited and Manipal Cigna Health Insurance Company Limited under the IRDAI composite registration number CA0101. Please note that, BFL does not underwrite the risk or act as an insurer. Your purchase of an insurance product is purely on a voluntary basis after your exercise of an independent due diligence on the suitability, viability of any insurance product. Any decision to purchase insurance product is solely at your own risk and responsibility and BFL shall not be liable for any loss or damage that any person may suffer, whether directly or indirectly. For more details on risk factors, terms and conditions and exclusions please read the product sales brochure & policy wordings carefully before concluding a sale. Tax benefits applicable if any, will be as per the prevailing tax laws. Tax laws are subject to change. BFL does NOT provide Tax/Investment advisory services. Please consult your advisors before proceeding to purchase an insurance product. Visitors are hereby informed that their information submitted on the website may also be shared with insurers. BFL is also distributor of other third party products from Assistance service providers such as CPP Assistance Services Private Limited, Bajaj Finserv Health Limited. etc. All product information such as premium, benefits, exclusions, value added services etc. are authentic and solely based on the information received from the respective Insurance company or the respective Assistance provider company.

Note- While we have made all the efforts and taken utmost care in gathering precise information about the products, features, benefits etc. However, BFL cannot be held liable for any direct or indirect damage/loss. We request our customers to conduct their research about these products and refer to the respective products sales brochure and policy/membership wordings before concluding sales.

Show All Text