Commutation of Pension
An officer is entitled to commute for a lump sum payment a fraction not exceeding 43% of his/her pension which is sanctioned for life.
Commutation of pension if applied after one year of retirement/invalidment is to be submitted through pension disbursing authority. In such cases, commutation is to be done after medical examination only.
Calculation of Commuted value of Pension
The commutation of pension is calculated as under:-
Portion of monthly pension to be commuted x 12 x purchase value applicable to the age next birthday.
The table of commutation of pension is given in Army Instruction No. 85/71An example showing calculation of commutation of pension is given in Illustration No.
Restoration of Commutation portion of Pension
The pensioners who have commuted a portion of their pension and on 1.4.1985 or thereafter have completed 15 years or will complete from the respective dates of retirement or from the date on which reduction in pension on account of commutation becomes effective will have their commuted portion restored.
Restoration of Commuted Portion of Pension in case of Absorption
The officers who had drawn lump-sum payment on absorption and have become entitled to restoration of 1/3rd commuted portion of pension shall, apart from payment of revised restored amount of 1/3rd commuted portion of pension, be also entitled to dearness relief on notionally revised full pension from the date of restoration instead of dearness relief on the revised restored amount of 1/3rd commuted portion. However, the officers who have opted for lump sum commuted value of their total pro-rata pension may get their pension restored to the extent of 43%
An example showing the calculation of restoration of commuted portion of pension in respect of officer absorbed in central public enterprise is given in Illustration No. 11
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