- Unions propose cutting pension restoration to 10-12 years.
- Currently, commuted pension is restored after 15 years.
- Lump sum calculated on 8 years, but deduction continues for 15.
A proposal submitted to the 8th Pay Commission could bring changes to the rules governing the restoration of commuted pensions for central government employees. Employee organisations have called for the existing 15-year restoration period to be reduced to between 10 and 12 years, arguing that the current timeline is longer than necessary.
The three-member commission, headed by Justice Ranjana Prakash Desai, is currently holding consultations with employee organisations and other stakeholders across states to gather suggestions and assess their concerns.
The proposal centres on a rule that determines how long pensioners must wait before the portion of their pension surrendered at retirement is restored to their monthly payments.
What Is The 15-Year Commuted Pension Rule?
Under the existing rules, central government employees can commute up to 40 per cent of their basic pension at retirement. This allows them to receive a lump-sum payment in advance in exchange for a corresponding reduction in their monthly pension.
The commuted portion is deducted from the pension every month, with the original pension amount restored after 15 years.
Employee unions have argued that this period should be reconsidered. According to their proposal, the lump sum paid at retirement is calculated using a commutation factor that represents approximately 8 years and 2 months of pension payments, or 98 months.
However, the corresponding deduction continues for 180 months under the existing 15-year rule.
Unions have therefore urged the 8th Pay Commission to consider shortening the restoration period to 10-12 years. If accepted, the proposal would change the timeline for pensioners to receive their full monthly pension again. The commission has not been reported to have approved the proposal.
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Commuted Pension Explained With A Rs 100 Example
The National Council of the Joint Consultative Machinery (NC-JCM) has used an example involving a monthly pension deduction of Rs 100 to explain its concerns about the existing arrangement.
Under a commutation factor of 8.194, the government calculates the lump-sum payment by applying the factor to the pension amount being commuted. For a monthly pension component of Rs 100, the calculation produces a lump sum of approximately Rs 9,833 for an employee aged 61, according to the example cited in the proposal.
After receiving this amount, the pensioner sees Rs 100 deducted from their monthly pension for the next 15 years.
Over 15 years, the total deductions would amount to Rs 18,000. The employee representatives have questioned why deductions continue for the full period when the initial lump-sum payment is calculated using a commutation factor equivalent to around 8 years and 2 months of pension.
They have argued that the restoration period should be reduced, with 10-12 years proposed as an alternative to the current timeline.
What Could Change For Pensioners Under The 8th Pay Commission?
The proposal seeks to reduce the time pensioners must wait for the commuted portion of their pension to be restored. If the commission recommends the change and the government accepts it, eligible pensioners could see their full monthly pension restored earlier than under the existing rules.
For now, the 15-year restoration period remains the applicable rule. The proposal is among the issues being raised during consultations with the 8th Pay Commission, and any change would depend on the commission’s recommendations and the government’s decision.
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Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: abplive.com
