Para 7.8 — CAM

7.8 COMMUTATION OF PENSION

7.8.1 Commutation of pension is governed by the Central Civil Services (Commutation of Pension) Rules, 1981.These Rules are applicable to all Government Servants who are entitled to Pension under Central Civil Services (Pension) Rules 1972 as amended from time to time. Commutation of pension is allowed either on medical examination or without medical examination as specified in the Rules. However, a Government servant against whom departmental or judicial proceedings have been instituted cannot avail of commutation benefit during pendency of such proceedings. The Government servant may commute up to forty percent of pension. If pension to be commuted results in fraction of a rupee, such fraction of rupee shall be ignored for the purpose of commutation. The commuted value to be paid in lump sum will be rounded off to next higher rupee. The commuted value of the pension will be worked out with reference to the 'Commutation Table' at rates applicable to the pensioner on the date on which the commutation becomes absolute.

7.8.2 Government servants retiring on superannuation may desire authorisation for payment of the commuted value of the pension at the time of the issue of the pension payment order. He will in such cases apply for commutation along with the pension papers in Form-6 before the date of retirement. The Pay and Accounts Officer in such cases will calculate and authorise the Head of the office to draw the amount of the commuted value of pension by submission of a bill to him. When the bill is received, the Pay and Accounts Officer will authorize the payment through electronic mode mentioning “not payable beforedate” indicating the date following the date of retirement of the pensioner. The Pay and Accounts Officer shall also indicate in the PPO that the commuted value of pension has been authorized separately for payment through the Drawing and Disbursing Officer and that the monthly pension has correspondingly been reduced from pension. However, the gross pension and the amount commuted shall also continue to be exhibited in the PPO. The commuted amount of the pension shall be restored on completion of fifteen years from the date the reduction of pension/completion of recovery for 15 years on account of commutation becomes operative in accordance with Rule 6 of CCS (Commutation of Pension) Rules, 1981:

Provided that when the commutation amount was paid on more than one occasion on account of upward revision of pension, the respective commuted amount of the pension shall be restored on completion of fifteen years from the respective date(s).

7.8.3 Where the pensioner has been drawing pension through the Bank and has not been paid commuted value of the pension by the Head of the Office on the authorisation issued by the Pay and Accounts Officer, the payment in such case will be made by the bank. This will be done on receipt of authorization from the Pay and Accounts Officer of the Ministry/Department or the Pay and Accounts Officer of the Union Territory Government/Administration, through a separate authority letter, as shown in APPENDIX 7.7. The payment Authority will be communicated to the concerned CPPC of Authorised Bank through CPAO, in accordance with the procedure indicated in the Scheme for Payment of Pensions to Central Government Civil Pensioners by Authorized Banks.

What This Means

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Key Points

• 1Up to 40% of pension can be commuted for a lump-sum payment
• 2Governed by CCS (Commutation of Pension) Rules, 1981
• 3Commuted value calculated using the Commutation Table based on age
• 4Pending departmental/judicial proceedings bar commutation until resolved
• 5Reduced pension continues for 15 years, then full pension is restored

Practical Example

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Frequently Asked Questions

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