Exploring The Future of Govt Employees' Commuted Pension Restoration

The National Council of Joint Consultative Machinery (JCM) sent the Centre a proposal to reduce the restoration period of commuted pension from 15 years to 12 years. This proposal has been put forward to the Centre multiple times before by several central staff unions and other bodies engaged in employee welfare issues.

Shiva Gopal Mishra, the Secretary of the National Council of Joint Consultative Machinery (JCM) wrote a letter to PM Narendra Modi, submitting 14 demands covering different issues faced by government employees.  The main demand was to cut the restoration time period of commuted pension to 12 years instead of 15 years.

What Is A Commuted Pension?

Employees and taxpayers contribute a portion of their salary every month to an annuity fund. This fund is distributed back to the employees at the time of retirement. It is very important to understand commuted pensions before making any decision regarding retirement plans.

Pension commutation meaning is when an employee retires, they can choose to get a portion of their pension in advance. This is known as commuted pension. Let’s understand it better with an example.

An employee of age 60 decides to retire and chooses to receive 10% of their monthly pension for the next 10 years in advance. This sum of money that is chosen to be retrieved in advance is known as commuted pension.

What Are The Rules Of Commuted Pension?

Two set rules have to be followed to receive the commuted pension. Let’s take a look at the two rules.

• According to Rule 5 of CCS (Commutation of pension) Rules, 1981, a government servant/employee can commute a lump sum payment of up to 40% of their basic pension.

• Rule 10 says that if the government revises or enhances a pensioner's pension after commutation, the applicant will receive the difference between the authorised and enhanced commuted pension.

Benefits Of Commuted Pension

Let us take a look at the benefits received for commuted pensions.

• Provides a lump sum against the total amount of pension.

• Financial flexibility.

• Helps cover expenses with the commuted pension.

How To Calculate The Commuted Pension Deduction?

Calculation of pension communication and gratuity of central govt employees can be done as follows.

• Multiply the commuted amount by itself and then by 12. This is the total commutation amount.

• The commuted amount is received by dividing the pension amount by the commuted percentage of the pension.

Conclusion

Before making any decisions regarding retirement plans, make sure to be updated and educated on such topics, especially commuted pension as it may come in handy. The Centre should also focus more on the difficulties faced by government employees/servants as there are many undiscussed issues.

To learn more about how commuted pension is recovered, click here. For any queries and problems, call the toll-free number 1800-11-1960 or mail care.dppw@nic.in