Guidelines for Pensioners – Commutation of Pension

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

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