Can a pensioner convert their Savings Account into a Pension Account?

Does a pensioner need a separate savings account and pension account? No! Here’s how he can transact using the same account

Are you a government pensioner wondering if you need to create a separate pension account to receive your pension? Many senior citizens who are pensioners are concerned about managing their retirement funds and pensions well. 

Retirement is quite accurately called the golden age of life, and one can reap the rewards of a hard-earned career through pension income and lots of leisure. However, many pensioners have queries and misconceptions about their pension account. Should you maintain two separate accounts – one for savings and the other for your pension?

The good news is that you can convert your existing savings account into a pension account to eliminate the hassle of managing multiple accounts. Pensioners aren’t required to open separate pension accounts in a bank if they already have an existing savings or current account. Your pension can be credited to the existing account each month. 

Joint account with spouse

State and Central Government pensioners typically open a joint account with their spouse in their desired bank to receive the pension amount. If you already have a joint savings account with your spouse, you don’t need to open another account, especially for receiving pension. You may continue to use the existing joint savings account.

You can operate this account as ‘Former or Survivor’ or ‘Either or Survivor’ and use it to receive family pension. In case of the death of a Central Government pensioner, their spouse who is nominated for the pension account under the Pension Payment Order (PPO) will receive it. The survivor need not open a separate single pension account in such an event. 

Minimum balance requirement

While the Reserve Bank of India (RBI) has not stipulated any minimum balance in the pension account, different banks have varied rules on this. Many banks define a minimum amount, but others have given pensioners the freedom to maintain a zero account balance for pension accounts. It is best to check with your bank regarding minimum balance criteria and make withdrawals keeping the threshold in mind.

Recording PPO in the bank’s passbook

The RBI has notified pension-paying banks to record the PPO number in the pensioners’ bank accounts and family pensioners to whom the pension is credited. This relieves pensioners of many challenges that can arise in case of the loss of the original PPO. The PPO is one of the essential documents for pensioners because it is mandatory to mention the PPO number while submitting the life certificate in November each year. Failure to submit the life certificate can lead to pension being stopped. 

Pensioners’ portal 

There is a great deal of confusion and misinformation around pension and pensioners’ rights. The Government of India has created a pensioners’ portal that lays out all the information, including detailed guidelines for pensioners. The portal includes information on classes of pension, retirement benefits, pension rules, schemes, and process maps. 

Additionally, it allows pensioners to lodge their grievances online and view the grievance status. Some of the topics covered in the portal include:

• Claims submissions
• Verification of PPO
• Transfer of pension account
• Commutation of pension
• Annual life certificate
• Revised guidelines and norms 
• NRI pension accounts
• Nomination of heirs

Government pensioners must nominate their heir(s) eligible to receive the arrears of pension, if any, in the event of their death. The central bank has advised banks to accept the nomination in Form A or B to facilitate the process.

There are more than 65 lakh pensioners in India, and the Department of Pension and Pensioners’ Welfare continues to improve the guidelines for banks to disburse pension to benefit them. Pensioners can continue using their salary or savings account to receive pension without the hassle of opening a separate account. Stay abreast of RBI notifications by visiting the RBI website for new circulars as they are issued. 

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