# How to Calculate the Commuted Value of Pension before Retirement

Contents

## Commutation Value of Pension

A Government servant has an option to commute a portion of pension, not exceeding 40% of it, into a lump sum payment as Commuted Value of Pension. If you exercise the option at the time of retirement, no medical examination will be required.

### Calculation of Commuted Value of Pension:

Lump sum payment of Commuted Value of Pension (CVP) is calculated with reference to the Commutation Table. The basic pension will be reduced by the portion commuted and the commuted portion will be restored after 15 years from the date of commutation made. However, Dearness Relief will continue to be calculated on the basis of the original pension (i.e. without reduction of commuted portion).

Here is the formula for how the commuted value of Pension (CVP) is calculated:
CVP = 40 % of Basic Pension X Commutation factor* X 12

* The commutation factor
You can find the exact commutation factor in the table below.

Moreover, you can also find an example of how to derive your CVP from your pension at the end of the Table below.

Age on next birthday Commutation value expressed as the number of yearâ€™s purchase Age on next birthday Commutation value expressed as the number of yearâ€™s purchase
20 9.188 51 8.808
21 9.187 52 8.768
22 9.186 53 8.724
23 9.185 54 8.678
24 9.184 55 8.627
25 9.183 56 8.572
26 9.182 57 8.512
27 9.180 58 8.446
28 9.178 59 8.371
29 9.176 60 8.287
30 9.173 61 8.194
31 9.169 62 8.093
32 9.164 63 7.982
33 9.159 64 7.862
34 9.152 65 7.731
35 9.145 66 7.591
36 9.136 67 7.431
37 9.126 68 7.262
38 9.116 69 7.083
39 9.103 70 6.897
40 9.090 71 6.703
41 9.075 72 6.502
42 9.059 73 6.296
43 9.040 74 6.085
44 9.019 75 5.872
45 8.996 76 5.657
46 8.971 77 5.443
47 8.943 78 5.229
48 8.913 79 5.018
49 8.881 80 4.812
50 8.846 81 4.611

### For example:

If theÂ Basic Pension of an employee is Rs. 12,000/-, Commutation is Rs. 12,000 x 40% = Rs. 4800/-. If the age at next birthday is 61 years then Commuted Values for Pension (CVP) from the above table = Rs. 4800 x 8.194 x 12 = Rs.4,71,974/- and Basic Pension will be reduced to Rs.7200/-. But the dearness relief will be calculated on full Basic Pension i.e. Rs.12000/- in this case.

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