RESTORATION PERIOD FOR COMMUTATION AMOUNT

RESTORATION PERIOD  OF COMMUTION AMOUNT

we all know that, every Government  employee  is allowed to commute  a certain % of his pension and receive a LUMPSUM amount as CAPITALISED VALUE.

 This Capitalised amount is recovered  monthly from their pension  for 15 years.

The monthly  recoverable amount is the % of pension you have commuted Whether  45 or 50%.

We are all in the opinion that, the paid amount is recovered in full between 10 to 13 years,  but being  deducted for 15 years. This is felt and talked  by many of us and all Associations  and put in various forums for consideration.

      LET US GO THROUGH  THE FOLLOWING  POINTS

The  capitalized value is calculated  as under:   ( S/ 037029/99)

Example:   Pensioner  whose Date of birth is  5-11-1957   Discharged in 1999

Age on his next birth day will be  say 43 yrs.   Commutation factor  : 15.15

His monthly pension  is    2275    commuted 45%.......1023

Capitalised Value will be:     1023 X 12 X 15.15 ( C.Factor)=  185982. Commutation.

 

As per  Commutation Rule No.6  of 1981,, this 1023 will be deducted for 15 years.That is  :  1023 X 12=  12276 per year   and  for 15 yrs -12276X15=184140(1 ) and it is less than  185982………………But if you calculate  in another way

   185982 / 12276= 15..15 yrs.   But  Maximum of 15 yrs recovery period.

 

Another case:    ( S/ 064653/2003 )

Commutation  amount………188650      amount commuted  1094 monthly

Yearly recovery ----1094 X 12=13128      For 15 yrs----13128 X 15=196920,  here it more than the commutation amount.

Again, in another way---------188650 / 13128=14.37 yrs   fully recovered but deducted for 15 yrs..

 

One more case:    (  S/ 036754/ 94 )

Commutation  amount------47884      Monthly  deduction- 283 

Yearly recovery—283 X 12= 3396         for 15 yrs=  3396 X 15=50940  it is also more .

In another way----47884 / 3396=14.1 yrs fully recovered  but deducted for 15 yrs.

NOTE:

If you compare  all the three cases,  we find that in each case the fully recovered period is differing  --- one is 15.15, another  14.37 and another  14.1 yrs.

Same way    ONE Bank employee’s Case:

Commutation   amount  --------88536     monthly deduction—868

Yearly=  868 X 12= 10416     for 15 yrs=  10416 X 15= 156240   it is more than comm..

But if you calculate other way  = 88536 / 10416= 8.5 yrs.  Fully  Recovered in 8.5 yr.

But  deducted for 15 yrs

Likewise, the recovery period will vary  for each pensioner. 

Note:  If a pensioner  dies before receiving Commutation,  or dies  before 15 year,

The balance amount of Commutation is waived.  No deduction from family pension.

It is a loss to government .

 Considering a nominal Notional interest  on the Commutation amount and the loss on account of death of pensioners, Government  ,  might have come to a decision  that an average  of 15 yrs will be fixed for  restoration of commuted value.

This is as per Central Civil Commutation of pension Rules -1981 – Rule no.6 

All our Associations , senior veterans  may  discuss   regarding this issue in various FORUMS.