# Question: What Is Commutation Of Pension?

If your participation in our pension scheme ended before 1 January, 2018, you will receive this small pension in the form of a one-off lump sum payment. This is known as commutation. If you haven’t got one yet, your pension will remain with us for the time being.

## How is pension commutation calculated?

Formula for working out Commuted Value of pension = Amount of pension to be commuted X 12 X purchase value for age next birth day.

## What do you mean by commutation of pension?

At the time of retirement, if an employee opts for commutation of pension, a lump sum amount is paid to the pensioner while on the balance the pension begins. In simple terms, commutation means a lump sum payment in lieu of periodic payments of pension.

## What is the benefit of commutation of pension?

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.

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## What is the rule for commutation of pension?

Rule 6 provides that reduction in the amount of pension on account of commutation shall become operative from the date of receipt of commuted value of pension by the pensioner or three months after the date of the issue of the authority asking the pensioner to collect the commuted value of pension by the Accounts

## What is a pension commutation example?

Such pension received in advance is called commuted pension. For example, at the age of 60 years, you decide to receive 10% of your monthly pension in advance for the next 10 years worth Rs 10,000. This will be paid to you as a lump sum. Therefore, 10% of Rs 10000x12x10 = Rs 1,20,000 is your commuted pension.

## Is commutation of pension is good or bad?

Taxability of Commuted Pension The commuted pension is fully exempt from income tax for government employees. For a non-government employee who receives pension along with gratuity, 1/3rd of the 100% of the commuted pension is exempt. The rest is taxed, like their salary.

## What is interest rate on commutation?

Permissible commutation was also raised from one third to 40% of the basic pay w.e.f. 1.1. 96. The Commutation Factor (CF) came down to 9.81 from 10.46. The rate of interest was 4.75% p.a. Those who superannuated between 1.1.

## What is commutation value?

A commuted value is the sum of money that a beneficiary is entitled to receive as a lump sum payment at retirement through a pension plan. This value is estimated based on factors including the future life expectancy of the beneficiary. Employees also have the option of taking their pensions in monthly payments.

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## What is commutation service?

WHAT IS COMMUTATION OF SENTENCE? It is the reduction of the period of a prison sentence. Page 9. WHAT IS CONDITIONAL PARDON? It is the conditional exemption of a guilty offender for the punishment imposed by a court.

## What is the commutation period?

Commutation shall become absolute on the date of application by Government employee or from the date following the date of retirement which ever is later or at the end of the 3 months after the issue of authorisation by the Accountant General for payment of commuted value of the pension or date of next birthday of

## Who qualifies for commutation of pension without medical examination?

(a) information furnished by the Head of Office in Part III of Form 1 is correct; (b) the applicant is eligible to commute a fraction of his pension without medical examination; (c) the commuted value of pension has been determined correctly by the Head of Office.

## Is commutation allowed on family pension?

Is there any limit on commutation of pension? A Government servant shall be entitled to commute for a lump sum payment up to 40 per cent of his pension.