7th Pay Commission New Commutation Factor Table
|Age next Birthday||Commutation value|
Commutation values for a pension of Rs. 1 per annum as per 6th CPC recommendations, effective from 1.1.2006. The table is based on a rate of interest on Commutation of Pension is 8.00% per annum.
Commutation values of a pension of Rs. 1 per annum, effective from 1.3.1971. The table is based on a rate of interest on Commutation of Pension is 4.75% per annum.
TABLE FOR COMMUTATION VALUES FOR A PENSION OF Re. 1 PER ANNUM
|Age next Birthday||Commutation value||Age next Birthday||Commutation value||Age next Birthday||Commutation value|
Explanatory Note: Due to the implementation of the recommendations of the sixth Central Pay Commission, it has become necessary to give retrospective effect to the proposed amendments from the date from which the recommendations of the Sixth Central Pay Commission were given effect to. It is certified that the interest of no person is adversely affected by giving retrospective effect to the proposed amendments.
The revised Table of Commutation Value for pension, appended to these rules shall be used for all commutation of pension which becomes absolute from the 2nd September 2008 and in the case of pensioners whose commutation of pension became absolute on or after 1st January 2006 but before 2nd September 2008, the pre-revised Table of Commutation Value for Pension shall be used for payment of commutation of pension based on pre-revised pay or pension and in respect of such pensioners, the revised Table of Commutation Value for Pension, appended to these rules shall be used for the commutation of additional amount of pension that has become commutable on account of retrospective revision of pay and pension.[Basis: LIC (94-96) Ultimate Tables and 8.00% interest]
Not exceeding 40% of monthly pension. Any fraction in the amount offered for commutation will be ignored. For example, if the monthly pension is Rs. 24,500 then the maximum amount admissible for commutation is Rs. 9,800 (24500 x 40/100) only.
Commutation Amount is calculated with respect to the Commutation factor taken from the Commutation Table as relevant to the age next birthday.
The formula for working out the lumpsum payable is as follows.
Two illustrations are given below as per the commutation of pension rules
Illustration 1: In the case of an employee who retired on July 2018 with a basic pension of Rs. 24,500
- Amount of pension offered for Commutation = Rs. 9,800
- Age next birthday = 61 years
- Commutation Factor = 8.194
- Lumpsum Payable = 9800 x 12 x 8.194 = Rs. 9,63,614 (rounded off)
- Amount of pension offered for Commutation = Rs. 510
- Age next birthday = 61 years
- Commutation Factor = 9.81
- Lumpsum Payable = 510 x 12 x 9.81 = Rs. 60,037 (rounded off)
The reduction in the amount of pension on commutation will become operative from the date of receipt of the commuted value by the pensioner, or at the end of three months after the issue of authority for payment, whichever is earlier. The restoration of the commuted portion of the pension will be admissible on completion of 15 years, for which the pensioner should apply to the pension disbursing authority.
Anomalies in Commutation of Pension
The General Secretary of Central Government Employees Confederation writes a letter to the Secretary of Department of Pension & Pensioners’ Welfare regarding the anomalies in commutation of pension.
It is to bring to your kind knowledge and needful action at your end the following in respect of Anomalies in Commutation of Pension, the present commutation table as last revision took place in the year 2008 with an interest rate of 8% compounded annually, The revision is imminent due to lowering in interest rates by the Central Government and LIC especially in last five years, now 14 years is over as every 10 years pay commission is set up and pay scales and other allowances are revised third commutation table is due from 1/1/2018.
Restoration of Commuted Portion of Pension to 12 years from the present 15 years considering interest, risk factor & Life Expectancy of 70 years. In this regard a detailed brief is given below.
1) Revision of commutation table.
There are two commutation tables one table-1 is effective from 1.3.1971- till 1/9/2008 with an interest rate of 4.75 %.
Second commutation table-2 is effective from 2/9/2008 till now with an interest rate of 8 %.
Commutation tables should be revised every 10 years .
Third commutation table is due from 1/1/2018 with an interest rate of 6.5 %.
Now the Government and LIC itself has lowered the interest rates from the past fifteen years especially in the last five years on small savings and LIC pension policy they should have a new Commutation Table – 3 and Commutation Value with effect from 1/1/ 2018.
The study of various government schemes and its interest rates are given below;
|Public Provident Fund (PPF)||1/1/2006||8.0%|
|Senior Citizen Saving Scheme (SCSS)||1/1/2006||9.2 %|
|National Saving Certificate (NSC) Post office||1/1/2006||11.3 %|
|Public Provident Fund (PPF)||1/1/2016||8.1%|
|Senior Citizen Saving Scheme (SCSS)||1/1/2016||8.6 %|
|National Saving Certificate (NSC) Post office||1/1/2016||8.1 %|
|Public Provident Fund (PPF)||1/1/2022||7.1%|
|Senior Citizen Saving Scheme (SCSS)||1/1/2022||7.4%|
|National Saving Certificate (NSC) Post office||1/1/2022||6.8%|
|UC Pradhan Mantri Vaya Vandana Yojana (PMVVY)||1/1/2022||7.4%|
|UC Jeevan Shanthi scheme||1/1/2022||6.0%|
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Also Check: Central Government Pay Matrix Table 2022 PDF