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 year’s purchase||Age on next birthday||Commutation value expressed as the number of year’s purchase|
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