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Guidelines for Pensioners – Commutation of Pension

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What is the meaning of Commutation of Pension?

All Central Government employees are allowed to commute 40% portion of Pension while retiring from service. Commutation is nothing but selling a part of percentage of pension to Govt and get a lump sum.

Commutation Factor for Superannuation – 8.194

Commuted portion of pension is required to be reduced from pension from the date of payment of the commuted value of the pension or after three months from the date of issue of PPO or from the date, capitalized sum is credited to the pensioner’s account. If the commuted portion of pension is not reduced as above, bring this to the notice of your PDA immediately to avoid a heavy recovery later.

7th CPC Recommendations on Commutation of Pension

  • There will be no change in the provisions relating to commutation values, the limit upto which the pension can be commuted or the period after which the commuted pension is to be restored.
  • The pension/family pension under para 5 and 7 above shall qualify for dearness relief sanctioned from time to time, in accordance with the relevant rules/instructions.

click to know more: 7th CPC on Pensionary Benefits – Calculation Methodology

COMMUTATION VALUES FOR A PENSION OF Re. 1 PER ANNUM
as per Sixth CPC recommendations, effective from 1.1.2006

Age next Birthday Commutation value expressed as number of year’s purchase Age next Birthday Commutation value expressed as number of year’s purchase Age next Birthday Commutation value expressed as number of year’s purchase
20 9.188 41 9.075 62 8.093
21 9.187 42 9.059 63 7.982
22 9.186 43 9.040 64 7.862
23 9.185 44 9.019 65 7.731
24 9.184 45 8.996 66 7.591
25 9.183 46 8.971 66 7.431
26 9.182 47 8.943 68 7.262
27 9.180 48 8.913 69 7.083
28 9.178 49 8.881 70 6.897
29 9.176 50 8.846 71 6.703
30 9.173 51 8.808 72 6.502
31 9.169 52 8.768 73 6.296
32 9.164 53 8.724 74 6.085
33 9.159 54 8.678 75 5.872
34 9.152 55 8.627 76 5.657
35 9.145 56 8.572 77 5.443
36 9.136 57 8.512 78 5.229
37 9.126 58 8.446 79 5.018
38 9.116 59 8.371 80 4.812
39 9.103 60 8.287 81 4.611
40 9.090 61 8.194 – –

Commutation of Pension Calculation for PBOR (Personnel Below Officer Rank)

A PBOR may commute 50% of his basic pension. Amount commuted will be in whole rupee.

Commutation Formula for PBOR

50% of pension x 12 x Purchase Value( on the age next birth day)

A commuted value of pension is calculated on the basis of age on next birthday, which falls after the date on which the commutation become absolute.

Absolute Date

  • Commutation application submitted After one year
  • The date on which medical board signs the medical proceedings.
  • Commutation application submitted within one year
  • The date of commencement of pension when application received prior to retirement.
  • The date of receipt of application by PSA where application is received after retirement.

Commutation Factor Value of Pension Calculator 2020

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