Know everything about Commutation of Pension

Concept of Commutation of Pension

Armed Forces personnel shall be entitled to commute for a lump sum payment upto 50% of their pension. It is well known that after introduction of 6^th CC, effective from 01 Jan 2006, 50% of last reckonable emolument is your basic pension.  Armed Forces personnel is entitled to get 50% commuted value of pension but in civil side, only 40% pension can be commuted.  

Formula of Commutation Calculation

50% of Basic Pension x 12 x Purchase Value corresponding to age on the next birthday (as per Commutation Table).

Illustration of Commutaion Calculation

Basic Pension – Rs 24447/-
Age at the time of retirement – 44 years
 [24447 x 12 x 9.019(Purchase Value for 44 years of age)] = Rs. 26,45,904/-

Commuted value of pension is calculated on the basis of the age of the individual on next birthday, which fall after the date on which the commutation becomes absolute. New table wef 2.9.2008 is as under :-

As per extended rules, the commuted portion of pension is restoed after 15 years from date of award of pension/commutated value of pension. However several court cases have been filed in different tribunals and HCs to reue the deducction period as based on rate of interest, the recoverable amount should not be more than 11 years. AFT has also passed such order whih is given here –

• Strategic Victory for Retirees: Centre Confirms Notional Increment for Pension Calculation in Rajya Sabha
  In a landmark confirmation that brings clarity to thousands of former Central Government employees, the Union Government has officially validated the issuance of orders regarding notional increments for pensionary benefits. This development marks the culmination of a protracted legal and administrative struggle for retirees who stepped down just hours before their scheduled annual increments. The… Read more: Strategic Victory for Retirees: Centre Confirms Notional Increment for Pension Calculation in Rajya Sabha
• CSD towards Aadhaar Biometric Billing System
  What the matter is ? A retired Junior Commissioned Officer (JCO) has, over the past few years, submitted multiple applications and DO letters to the then General Officer Commanding (GOC), Dakshin Bharat Area, highlighting serious operational and systemic issues related to Dakshin Bharat Area Canteens (DBACs) and their Extension Counters (ECs). In the interest of… Read more: CSD towards Aadhaar Biometric Billing System
• Ex Servicemen Change Your Old Discharge Book in this Way
  If your old and original Discharge Book, which was issued during retirement, is in very bad condition and don’t have all necessary information, then you can apply to Record Office for a Duplicate Discharge Book as replacement.  DOCUMENTS REQUIRED FOR REPLACEMENT OF OLD DISCHARGE BOOK 1) Personal Application. Required in 3 original copies and addressed… Read more: Ex Servicemen Change Your Old Discharge Book in this Way
• Exservicemen Must Follow – AGI Extended Insurance Benefit 2026 – Complete Guide
  Background and Objective of Army Group Insurance (Extended) Benefit for Exservicemen Family The Extended Insurance Benefit 2026 has been introduced to ensure continued financial protection to defence personnel and eligible beneficiaries beyond the standard insurance coverage period. The scheme primarily aims to safeguard families of service personnel and ex-servicemen against financial hardship arising from death… Read more: Exservicemen Must Follow – AGI Extended Insurance Benefit 2026 – Complete Guide
• SSC Examinations 2026: A Golden Opportunity for Job Seekers and Ex-Servicemen
  Background: Role of SSC in Central Government Recruitment The Staff Selection Commission (SSC) is one of India’s most important recruitment bodies, responsible for selecting candidates for Group ‘B’ (Non-Gazetted) and Group ‘C’ posts in various Central Government Ministries, Departments, and Offices. Every year, SSC conducts multiple national-level examinations that offer job security, steady income, pensionary… Read more: SSC Examinations 2026: A Golden Opportunity for Job Seekers and Ex-Servicemen