Commutation Value of Pension Calculation Test

Share this Post

Calculation of Commutation Value:The Pensioners who taking Service Pension are eligible to commute up to 40% of service Pension. The dependents of a pentioners are not eligible to commute their Family Pension. The commuted amounted will be restored after 15 years.Commutation Values will be decided by the Governments for Particular age groups.commutation value will be calculated as age at next birthday
Ex: If Age of a Pentioner is 55 years, when he wanted to commute ,then commutation value was
calculated at 56 years.

APSSSR 1996 Test-1

Commutation Value of Pension Calculation

The commuted value of a pension is the lump-sum amount you receive by converting a portion (often up to 40% for government employees) of your future monthly pension payments, calculated using your age and a specific commutation factor, with the remaining pension continuing (and often restoring after 15 years), providing immediate cash for needs like emergencies or investments. 

How it Works

Option for Commutation: You choose to receive a part of your monthly pension as a lump sum at retirement.

Calculation: The lump sum is determined by your monthly pension, the percentage you choose to commute, and a “commutation factor” based on your age.

Lump Sum PaymentYou get this one-time payment immediately.

Reduced Monthly Pension: Your ongoing monthly payment is reduced by the commuted portion. 

RestorationAfter a set period (typically 15 years for government employees), the full pension (including the commuted part) is restored. 

Leave a Comment

error: Content is protected !!