Should pension be commuted or not?

Should pension be commuted or not?

Again, even after pay commission effect, the gap between maximum commuted and non-commuted pension is only Rs 22,410 while the officer gets Rs 23.88 Lakhs as bulk if he commutes by 50\%. We strongly recommend that all officers should commute their pension to the maximum allowed 50\%.

How many years can a pension be commuted?

15 years
Commutation of Pension Lump sum payable is calculated with reference to the Commutation Table. The monthly pension will stand reduced by the portion commuted and the commuted portion will be restored on the expiry of 15 years from the date of receipt of the commuted value of pension.

What are the pensionary benefits?

The retirement benefits mainly consist of the employees’ leave encashment (employees are allowed to accumulate leaves and exchange them for cash on their retirement), retirement gratuity, and the amount that they were contributing to their provident fund account throughout their service.

What is the difference between Uncommuted pension and commuted pension?

Now, when the employee or his relative takes the pension on regular or monthly basis then it is known as uncommuted pension whereas when the sum of amount recievable by the beneficiary is withdrawn in whole instead of regular payments, then it is known as commuted pension.

When commuted pension is restored?

(2) Commuted portion of pension will be restored after fifteen years from the date of retirement.

How commuted pension is recovered?

Essentially, on retirement, if the employee opts for commutation of pension, a portion is paid as a lump sum to the pensioner while on the balance the pension begins.

What is additional quantum of pension?

The amount of Additional Quantum of Pension has to be shown distinctly in the Pension Payment Order. For example, in a case where a pensioner is more than 70 years of age and his/her Revised Consolidated Basic Pension/Revised Consolidated Basic Family Pension is Rs. 2021 on attaining the age of 70 years and above.

Can a person get two pensions?

Government Pension Scheme: One Can Avail 2 Family Pensions; Details Here. Yes it is possible if both the parents were government employees as per details provided by the Department of Pension & Pensioners’ Welfare. However, there are certain conditions while availing double family pensions.

How much of commuted pension is exempt?

If gratuity is also received with a pension – 1/3rd of the amount of pension that would have been received, if 100\% of the pension was commuted, is exempt from commuted pension and remaining is taxed as salary.

Under which section commuted pension is exempt?

As per section 10(10A), any commuted pension, i.e., accumulated pension in lieu of monthly pension received by a Government employee is fully exempt from tax.

Is restoration of commuted pension automatic?

It is, therefore, requested that a mechanism may be established to restore the commuted portion of pension automatically after expiry of 15 years of retirement/reduction in pension on account of commutation become effective and for payment of additional pension automatically on attaining the age of 80 years or above as …

Can pension be commuted twice?

pension is expressed as a percentage or fraction of the total pension admissible to him and is allowed in the first instance to commute such percentage or fraction of his anticipatory or provisional pension shall, in event of his final pension being more than his anticipatory or provisional pension, be allowed to …

When does the commutation of pension 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 ;

Should you opt for commutation of EPs pension?

If you opt for commutation of EPS pension, you get a lump-sum amount but reduced pension is payable every month for the next 15 years. However, your pension amount gets restored after 15 years. So, you need to consider ‘opportunity cost’ and inflation rate before you take final decision.

How is the pension calculated after 33 years of service?

Further, if you do 33 years of service you get full pension as per the formula which will be based on you Pay. If you have 20 years plus service then some organisation give benefit of 5 years notional service. Thus if you have put 20 yrs service your pension will be calculated by adding 5 yrs in your service.

How much of my pension can I commute in India?

How much of your pension you can commute depends on the Rule of the Pension Fund but in most cases one third of pension is allowable for commutation. For example if your pension is Rs 3000/- u can commute one third which is Rs 1000/- for which u will get lumpsum and your monthly pension will be Rs. 2000/-.