Thiruvananthapuram: The Finance Department has decided to withhold the pension of government employees who retire without repaying loans taken during service, leaving the liability to their guarantors. Although the latest order pertains to a former Additional Secretary in the Secretariat, it is expected to serve as a precedent for similar cases in the future as the Kerala Public Service Commission (PSC) has also endorsed the decision.

The retired officer, who served as an Additional Secretary in the Finance Department, had borrowed ₹60 lakh from the Secretariat Staff Co-operative Society in 2017 but failed to repay the loan before retiring in 2022. The loan had been sanctioned on the guarantee of three Joint Secretaries.

One of the guarantors, after receiving a recovery notice, lodged a complaint. Following an inquiry, the Thiruvananthapuram Deputy Superintendent of Police recommended that outstanding loan amounts should be recovered from retirement benefits or pension when defaulting officials retire.

Accepting the recommendation as an interim measure, the government sought an explanation from the retired officer. Finding the explanation unsatisfactory, it ordered that the pension be withheld until the officer clears the loan dues and produces a no-liability certificate. Once the liability is settled, the withheld pension will be released with interest.

The decision was taken with the concurrence of the PSC. Under the Kerala Service Rule, pension is subject to the condition that a pensioner's future conduct remains satisfactory. The government has interpreted failure to repay a loan as being inconsistent with that requirement.

However, there is uncertainty over whether this decision—taken in response to an individual complaint and without amending the service rules—can be universally applied to all similar cases. Legal experts believe that only a formal amendment to the service rules can ensure that employees who default on loans do not leave their colleagues, who stood as guarantors, to bear the financial burden.