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Modi government is brainstorming; lakhs of pensioners can get the benefit of full pension 3 years earlier; know what is commuted pension?


The Modi government is brainstorming on a big pension related demand of government employees before the 8th Pay Commission. There are indications that the central government is likely to consider it seriously. This demand is related to reducing the period of commutation from 15 years to 12 years. If this proposal is implemented, then lakhs of pensioners can get the benefit of getting full pension 3 years earlier.

What is commuted pension and why is this an issue?

When a government employee retires, he gets the option of taking a part of the pension in lump sum. This process is called commutation. After this, the government “recovers” that amount by deducting it during 15 years.

40% of the total pension is withheld

Amount is deducted from it on a monthly basis for 15 years

After this, full pension is received from the 16th year

In reality, this recovery by the government is completed in 11–12 years only. That is why employees have been saying for a long time that waiting for 15 years is wrong, full pension should be started only after 12 years.

What do the government and the Pay Commission say?

In the meeting of SCOVA (34th meeting), Union Minister of State Dr. Jitendra Singh assured that this demand will be considered. It can be included in the Terms of Reference (ToR) of the 8th Pay Commission. The 5th Pay Commission had also recommended reducing the commutation period from 15 to 12 years. Some state governments have already implemented it.

What will change for employees?

Period of commuted pension is currently 15 years. It will reduce to 12 years.

At present, employees start getting full pension from 16th year. If the change is implemented they will get full pension from 13th year.

Employees will start getting full pension 3 years earlier.

Pensioners will be able to get full pension 3 years earlier. If recovery is done in 11–12 years, then a 15-year pause is unnecessary.

Relief in old age

Additional income can be useful for a retired person, especially at the age of 70+. The positive signals received from the government have increased the possibility that a decision to reduce the commutation period can be taken in the 8th Pay Commission. If this happens, it will be a big corrective step for government pensioners.

(Prakash Kumar Pandey)

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