Pension commutation is a financial option available to pension holders that allows them to exchange a portion of their regular pension payments for a lump sum payment. In other words, it's the process of converting a part of your future pension income into an immediate, one-time payment. The pension commutation formula is commutation amount x commutation factor x 12.
Is there any commutation of pension calculator?
If you want to calculate the commutation of pensions, you can take this as an example:
Lump Sum = 40% of Pension x Commutation Factor
For instance, if a pension holder has a monthly pension of ₹20,000 and the commutation factor at their age is 9.155, the calculation would be:
Lump Sum = 40% of ₹20,000 x 9.155 = ₹7,322
Therefore, the pension holder would receive a lump sum payment of ₹7,322, while their monthly pension would be recalculated based on the reduced amount after commutation. It's crucial to understand the implications before making a decision and to consult official resources or financial experts for accurate and up-to-date information.
I suggest you do the calculation using the online calculator available on the pension portal as a lot of data needs to be provided for it. Here is the link:
https://pensionersportal.gov.in/PensionCalculators/RevisedPensionCalculator_2016/PensionCalculator_7pc.aspx
So calculate the commutation of pension easily now.
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Before telling you how to calculate commutation of pension, I will share with you what is the commutation of pension. Both employer and employee contribute to an annuity fund which helps a person after retirement. But the lump sum amount you receive after your retirement is known as commutation of pension. So, how to calculate commuted value of pension.
For any legal consultation contact expert lawyers at NoBroker legal services! Get home loans at the lowest interest rate from NoBroker and avoid hefty paperworkAlthough commutation of pension is a tricky process there is a formula to know the amount. Let us know the calculation of commutation of pension.
How to calculate commutation of pension?
Commutation value of pension is= The Amount of pension to be commuted X 12 X purchase value for age next birthday.
I will share with you an example so that you can understand it better.
Post |
Class - II |
Date of Birth |
15.04.1951 |
Date of Appointment |
26.12.1973 |
Date of Retirement |
30.04.2011 |
Qualifying Service |
37 years 4 months 5 days |
Pension |
Rs. 5843/- |
Portion of Pension to be Commuted: 40% i.e. 40% of 5843 |
2337.20 |
Portion to be commuted after ignoring the fraction |
Rs.2337/- |
Age next birthday i.e. on 15.04.2012 |
61 years |
Purchase value |
8.194 (as per new Commutation Table) |
Amount of commutation |
2337 X 12 X 8.194 |
229792.54 Say Rs. 229793/- |
|
Commuted value of Pension |
Rs. 229793/- payable on or after 01.05.2011 |
I hope you know how to calculate commutation of pension now.
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Authors Of The Question
How to Calculate Commutation of Pension?
Diashinee
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2 Answers
2 Year
2022-08-11T10:36:53+00:00 2023-10-25T17:27:50+00:00Comment
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