Friday, May 10, 2013
ATTENTION VETERAN BROTHERS SERIES-8
KNOW ABOUT COMMUTATION OF PENSION.
A Central Government servant is entitled to commute for a Lump sum payment, a fraction of his pension .For defence it is maximum of 50%.
1) Superannuation pension under Rule-35
2) Retiring pension …………………. Rule-36
3) Pension on Absorption……….. Rule- 37
4) Compensation pension on
Abolition of permanent post….. Rule-39
The following categories also eligible to commute :
a) Those who retiree on invalid pension/ Disability pension Rule- 38
b) Those who are compulsorily retired from service………. Rule- 40
c) Those who are in receipt of compassionate allowance under Rule-41
How the commuted value is calculated:
For example : A Sub- Group ‘Y’ was sanctioned monthly pension of Rs.10690 / -after 28 yrs of service. He has commuted 50% of pension.
i.e = 10690 X 50% = 5345/- is the commuted portion of his pension.
The capitalized vale is calculated on the basic of his Date of birth and the commutation factor. (Age on next DOB)
His date of birth is 22-3-1959 Date of retirement – 1-12-2009
Next DOB will be 22-3-2010
Age on next DOB - 2010-1959=51
The commutation factor for age 51 is----8.808
Now the commutation Value will be= Commuted portion X 12 X commutation factor
= 5345 X 12 X 8.808= 564945.12 rounded to= 564946/-
This Sub will get this much of commutation amount. And an amount of Rs.5345 will be deducted every month for 15 yrs.
REDUCTION IN THE PENSION ON ACCOUNT OF COMMUTATION:
The reduction of commuted value of pension ( CVP) will start form the date of credit of the capitalized value to the pensioners account.
RESTORATION OF COMMUTED VALUE OF PENSION:
Rule No 6 and 10, 10a -Commutation of pension rule-1981.
Commuted value of pension shall be restored after completion of 15 years from the date of credit of the Lump Sum to the pensioners account.
For example ,
in this case: Date of Credit of Lump Sum…4-2-2010
Amount of commuted portion…….5345/-
Date of restoration of this amount will be…………………….. 4-2-2025. … … ( 1)
Is it clear………………………………………………………………Situation No-I
Now, there may be cases where the Commuted value is Enhanced retrospectively as the result of Government decision, say pay commission report announced later..
The amount of pension may be revised/ enhanced, thus commuted value and the commutation is also enhanced and the differential amount of Capitalised value paid to the pensioners at later date. Say 29-9-2010
Here again, the date of restoration will be 15 years for the date of credit of the differential amount of the capitalized value, i.e 29-9-2010.
In this particular case: The original commuted portion was…..5345/- ( 50% of 10690/)
Now as the pension is increased, the CVP also increased to 5985.( 50% of 11970)
Here the difference in commuted portion is= 5985 – 5345= 640.
The first CVP of rs.5345 will be restored on 4-2-2015
The second portion of Rs.640 will be restored on 29-9-2025……… (2 )
Most of our veteran brothers are on the opinion that the whole portion of CVP will restored after 15 years from the date of retirement, which is not correct.
Where ever, commuted value was credited Twice in the account, the Restoration also will be two time/ dates.
( Ref: F.No.42/5/2012-P & PW (G) , GOI, Dept. of Pen & PW, New Delhi dated 31-8-2012. )
Note; Effect of commutation on Family pension:
Commutation of pension has no effect on quantum of Family pension as the Rate of Family pension is based on the emolument of central govt.servant just before retirement.
Suppose a pensioner dies, the deduction of commuted amount ceases. No deduction on family pension.
Again, if the pensioner , after retirement dies before receiving the commuted amount, his wife is eligible for that amount and there will be no deduction .
All veteran brothers please make a note of this and do not unnecessarily get in to arguments with bankers in this regard.