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%.
Eligible Pension:
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.
NOTE:
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.
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