Commutation of Pension – Formula, Calculator, Orders, Rules & Forms

Commutation of Pension

Complete Compilation 

Eligible

Basically, all the Government Employees are eligible to commute a percentage of his monthly pension amount, a Government servant shall be entitled to commute for a lump sum payment of an amount not exceeding 40% of his pension. If percentage of pension to be commuted results in fraction of a rupee, such fraction of a rupee shall be ignored for the purpose of commutation – Rule 5

No Government servant against whom departmental or judicial proceedings, as referred to in Rule 9 of the Pension Rules, have been instituted before the date of his retirement, or the pensioner against whom such proceedings are instituted after the date of his retirement, shall be eligible to commute a percentage of his provisional pension authorised under Rule 69 of the Pension Rules or the pension, as the case may be, during the pendency of such proceedings  – Rule 4

Commutation of Pension Formula

Total Commutation Amount = Commuted Amount  x  Commutation Factor x  12

Note :

Commuted Amount : Government Employee pension amount is Rs.32000/- at the time of retirement, he  / she commuted 40% of his pension, then the commuted amount is 40 percent of Rs.32000 i.e. 12800 is the commuted amount here.

Commutation Factor :  In the  CCS (Commutation of Pension) Rules, the Commutation factor value is given for  different ages, this table value is effective from 1.1.2006 –  Click here to find the Commutation Value

Commutation of Pension Illustration : 

Commuted Amount = Rs. 12800/-

Commuted Factor = Take Example, Age Next birthday is 42 years, then the commutation value is 9.059 as per the Commutation Table 

Total Commutation Amount = 12800 X 9.059 x 12

Total Commutation Amount = Rs.13,91,462/-

Commutation Factor Table

Two Tables available for Central Government Employees –

• Table 1 is effective from 1.3.1971 – Click here for Table 1
• Table 2 is effective from 1.1.2006 as per the 6th Pay Commission recommendation – Click here to Table 2

Commutation of Pension Calculator

Check here for commutation of Pension calculator 

Restoration of Commuted Portion of Pension

The commuted amount of pension shall be restored on completion of 15 years from the date the reduction of pension on account of commutation becomes operative in accordance with rule 6:

Provided that when the commutation amount was paid on more than one occasion on account of upward revision of pension, the respective commuted amount of pension shall be restored on completion of fifteen years from the respective date(s)

Check here for Eligibility for Restoration of Commuted portion of pension

When Commutation of Pension to become absolute ?

 The commutation of pension shall become absolute in the case of an applicant referred to –

(i) in sub-rule (1) of Rule 13, on the date on which the application in Form 1 is received by the Head of Office ;

(i-a) in sub-rule (3) of Rule 13, on the date following the date of his retirement ;

(ii) in Chapter IV, on the date on which the medical authority signs the medical report in Part III of Form 4 ;

Provided that –

(a) in the case of an applicant who is drawing his pension from a treasury or Accounts Officer, the reduction in the amount of pension on account of commutation shall be operative from the date of receipt of the commuted value of pension or at the end of three months after issue of authority by the Accounts Officer for the payment of commuted value of pension, whichever is earlier, and

Click here to continue – When Commutation of Pension to become absolute ?

Restoration of Commuted Pension

Rule 10A : The commuted amount of pension shall be restored on completion of 15 years from the date the reduction of pension on account of commutation becomes operative in accordance with rule 6:

Provided that when the commutation amount was paid on more than one occasion on account of upward revision of pension, the respective commuted amount of pension shall be restored on completion of fifteen years from the respective date(s)

Nomination

Rule 7 : An applicant shall make a nomination in Form 5 along with the application referred to in Rule 13 or Rule 19, as the case may be, conferring on one or more persons the right to receive the commuted value of pension in case the applicant dies without receiving the commuted value on or after the date on which commutation became absolute.

(2) If there is no such nomination, or if the nomination made does not subsist, the commuted value shall be paid to the family in the manner indicated in sub-rule (1) (b) of Rule 51 of the Pension Rules.

(3) If in any case the commuted value cannot be paid in the manner indicated in sub-rules (1) and (2), the same shall be paid to his/her heirs.]

Commutation of Pension without Medical Examination

Eligible to commute a percentage of his pension without medical examination

Rule 12:

(i) a superannuation pension under Rule 35 of the Pension Rules ; or

(ii) a retiring pension under Rule 36 of the Pension Rule ; or

(iii) a pension on absorption in or under a corporation or company or body in terms of Rule 37 of the Pension Rules and who elects to receive monthly pension and retirement gratuity ; or

(iv) a compensation pension on abolition of permanent post under Rule 39 of the Pension Rules ; or

(v) a pension in whole or in part on the finalization of the departmental or judicial proceedings referred to in Rule 9 of the Pension Rules and issue of final orders thereon,

shall, subject to the limit in Rule 5, be eligible to commute a percentage of his pension without medical examination :
Provided that he applies for commutation of pension in Form 1 or Form 1-A in accordance with the provisions of Rule 13.

NOTE. – Pension referred to in Clause (i), Clause (ii) and Clause (iv) shall include the provisional pension sanctioned under Rule 64 of the Pension Rules

Commutation of Pension after Medical Examination

Eligible to commute a percentage of his pension after medical examination.

Rule 18 :

(i) retires on invalid pension under Rule 38 of the Pension Rules ;or

(ii) Omitted by G.I., Dept. of P. & P.W., Notification No. 4/42/91-P. & P.W. (D), dated the 25th June, 1997..

(iii) is compulsorily retired from service as penalty and is granted pension under Rule 40 of the pension Rules; or

(iv) is in receipt of compassionate allowance under Rule 41 of the Pension Rules ; or

(v) has retired from service on one of the pensions referred to in Rule 12 but his application for commutation has not been received by the Head of Office within one year of his retirement, shall be eligible to commute a percentage of his pension subject to the limit specified in Rule 5 after he has been declared fit by the appropriate medical authority.

Second Medical Examination

In case the pensioner has been refused commutation on medical grounds or if he, having once declined to accept commutation on the basis of addition of years to his actual age, recommended by the medical authority, applies for a second medical examination, such medical examination will be held after one year of the first medical examination.

Rule 26 : 

(1) Subject to the provisions of Rule 27, the medical examination in the case of an applicant referred to in Clause (c) of sub-rule (1) of Rule 22 shall take place after the expiry of a period of not less than one year from the date of the first medical examination.

(2) If the applicant desires to be re-examined on the expiry of the period specified in sub-rule (1), the examination shall be by a Medical Board at his own expense. For this purpose, he shall address a letter to the Head of Office with the request that arrangements for his re-examination by a Medical Board may be made. He shall indicate in the letter

(i) the medical authority which examined him earlier and the date on which such examination took place,
(ii) the place where he was examined,
(iii) the opinion of the medical authority,
(iv) the date of birth and the date of retirement,
(v) designation of the post held at the time of retirement,
(vi) the amount of pension authorized,
(vii) the percentage of pension which was originally applied for commutation.

Commutation of pension on more than one occasion

DOPPW released the office memorandum on 31st Oct, 2022 for clarification of Commutation of pension on more than one occasion

References/representations have been received in this Department seeking clarification whether it is permissible for a person, who has commuted a percentage of his basic pension which is less than 40% of his basic pension, to commute a percentage of basic pension on a second or subsequent occasion within the overall maximum limit of 40%.

As per Rule 10 of CCS (Commutation of Pension) Rules, 1981, an applicant who has commuted a percentage of his final pension and after commutation his pension has been revised and enhanced retrospectively as a result of Government’s decision, the applicant shall be paid the difference between the commuted value determined with reference to enhanced pension and the commuted value already authorized. For the payment of difference, the applicant shall not be required to apply afresh. This Department’s OM No. 42/14/2016-P&PW (G) dated 24.10.2016 provides that those pensioners who retired from 01.01.2016 till 04.08.2016, i.e. the date of issue of orders for revised pay/pension based on the recommendations of the 7th CPC, may be given an option, in relaxation of Rule 10 of CCS (Commutation of Pension), Rules, 1981, not to commute the pension which has become additionally commutable on revision of pay/pension on implementation of recommendations of the 7th CPC.

There is, however, no provision in the Central Civil Services (Commutation of Pension) Rules, 1981 for commutation of a percentage of basic pension on a second or subsequent occasion within the overall maximum limit of 40%, if the pensioner had originally commuted a percentage of his basic pension which was less than 40% of his basic pension

Click here for DOPPW Order

Latest Office Memorandum for Commutation of Pension

• Submission of Nomination for Arrears of Pension and Commutation of Pension following the Introduction of ‘Form 6-A’: DOPPW O.M dt 11.09.2024September 13, 2024
• Interest on delayed payment of commuted value of pension: DOPPW ClarificationNovember 1, 2022
• Commutation of pension on more than one occasion: DOPPW ClarificationNovember 1, 2022
• Pay Commission Recommendation: Deduction of commuted pension from the pension: DOPPW O.MOctober 26, 2022
• Deductions towards commutation are required to be made from family pension: DOPPW Clarification O.MOctober 26, 2022

Commutation of Pension Forms

Forms	Form used for	Download Link
Form 1	Form of Application for Commutation of a percentage of Pension without Medical Examination	Click here
Form 1A	Form of application for Commutation of a percentage of superannuation pension without medical examination when applicant desires that the payment of the commuted value of pension should be authorized through the pension payment order	Click here
Form 2	Form of application for commutation of pension after medical examination by an applicant referred to in rule 18 of the central civil services (commutation of pension) rules, 1981	Click here
Form 3	Form of Letter of the Chief Administrative Medical Authority  – Medical Examination – Commutation of Pension	Click here

Click here to download more Commutation of pension forms – Form 4 , Form 5 & Performa