Commutation of Pension Rules- AAO 2025

allowance referred to in Chapter V of the Pension Rules but does not include extra pension and the amount, by whatever name called, granted by the Government to a pensioner as a compensation for higher cost of living
k Pension Rules means the Central Civil Services (Pension) Rules,1972 now 2021.
l Provisional Pension means the pension referred to in Rule 64 or Rule 69 of the Pension Rules, as the case may be
m Table means a table appended to these rules
Note: The words and expressions used in these rules but not defined shall have the meanings respectively assigned to them in the Pension Rules

4. Restriction on commutation of pension
Government servant against whom departmental or judicial proceedings, have been instituted before the date of his retirement, or the pensioner against whom such proceedings are instituted after the date of his retirement, shall not be eligible to commute a percentage of his provisional pension, and during the pendency of such proceedings. No Commutation in case of Rule 8 of Pension Rules

5. Limit on commutation of pension


• A Government servant shall be entitled to commute for a lump sum payment of an amount not exceeding forty percent of his pension.
• In an application for commutation in Form 1(w/o Medical Examination- within 1yr) or Form 1-A (w/o medical in PPO – superannuation) or Form 2 (with medical), as the case may be, an applicant shall indicate the fraction of pension which he desires to commute and may either indicate the maximum limit of forty percent of pension or such lower limit as he may desire to commute.


8. Calculation of commuted value of pension
The lump sum payable to an applicant shall be calculated in accordance with the Table of the values prescribed from time to time and applicable to the applicant on the date on which the commutation becomes absolute.
Illustration
Emoluments ₹ 28,800
Retired after qualifying service of 12 years
Pension = Half of the Salary i.e. 14,400
Maximum amount of pension for commutation not exceeding 40% of monthly pension.
Commuted Pension = 14,400 X 40% = 5760

Formula will be – Amount of Pension X 12 X Commutation Factor as per table

Lumpsum Payable
5760 X 8.194 x 12 = 5,66,369.29
Rounded off to the next higher rupee.
= 5,66,370

9. Commutation of provisional pension
• A Government servant to whom, pending assessment of final pension, provisional pension has been sanctioned under Rule 62 of the Pension Rules 2021 shall be eligible to commute a fraction of such provisional pension subject to the limit specified in Rule 5.
• Where an applicant desires to commute a percentage of his provisional pension which works out to be not exceeding Rs. 6000 per month.
• On the determination of final pension, the applicant becomes entitled to commute his pension up to Rs.6000 per month, he shall not be required to undergo medical examination for payment to him of the difference between the commuted value of the pension originally commuted and the pension commuted subsequently.
• If on the determination of final pension, the applicant becomes entitled to commute a sum exceeding Rs.6000, he shall, for commutation of pension exceeding rupees one hundred, be required to apply afresh in Form 2.
10.Retrospective revision of final pension
• An applicant who has commuted a percentage of his final pension and after commutation his pension has been revised and enhanced retrospectively as a result of Government's decision, the applicant shall be paid the difference between the commuted value determined with reference to enhanced pension and the commuted value already authorized. For the payment of difference, the applicant shall not be required to apply afresh.
10-A. Restoration of Commuted Pension
• The commuted amount of pension shall be restored on completion of fifteen years from the date the reduction of pension on account of commutation becomes operative in accordance with rule 6.

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