Different banks have different rules regarding the minimum balance that should be kept in the pension account. While some banks allow to keep a zero balance others specify the minimum amount that you should maintain in your account.
So, when you open an account at any bank of your choice be careful to clarify whether the bank requires any minimum balance to be maintained or allows a zero balance account. If your bank allows a zero balance then you can withdraw all your money that you receive as pension in your pension account.
If your pension amount is Rs.15000 and you are required to keep a minimum balance of Rs.500 in your pension account then you must withdraw Rs.14500 from your account. You must keep the rest with the pension account otherwise it will attract penalty.
The pension is generally distributed to all the pension accounts over the last four working days of the month. It depends on the convenience of the pension paying branch. However, in the month of March pension is credited on or after the first working day of April.
In order to receive your pension, you do not have to open a separate pension account if you already have a savings account. The pension can get credited to the savings bank account that the pensioner has with any bank.
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Pensioners of Central and State government can open a joint account with his / her spouse where the organization has accepted such kind of arrangement. The joint account can be operated either by "Former or Survivor" or by "Either or Survivor" whichever suits the pensioners best.
Importance to check with your bank on balance requirements
Recently, many banks raised the minimum requirement that one needs to keep the balance in the savings account. One is not sure whether there would now be implications for pension balance accounts as well. Let us now give you an example of Bank of India. This large government owned bank in the country allows zero balance and does not charge pensioners for not maintaining the average quarterly balance. Upto 10 debit entries are free, beyond which the bank levies a charge. Six demand drafts per quarter are also issued free of any cost. We are not sure if all banks offer the same facilities, but, Bank of India's deal is defintely not bad for investors.