7th Pay Commission: These central govt pensioners don't need to apply for additional payment after commutation Know what the Union government said
The Union government has clarified the rules of commutation of pension in cases where there has been revision of pension due to recommendations of the 7th pay commission or application for commutation was submitted after retirement, i.e., not at the time of retirement. The Department of Pension & Pensioners’ Welfare (DoPPW) issued this clarification via a notification on October 25, 2022.A central government employee is eligible to commute up to 40 per cent of his pension into a lump sum payment. The lump sum amount is calculated as per the commutation table. Now, there have been several doubts regarding which pension central government employees are allowed to commute — pension authorised at the time of retirement, or the pension revised subsequently and payable at the time of application for commutation.
Clarifying this, the DoPPW stated in its notification, "As per Rule 10 of CCS (Commutation of Pension) Rules, 1981, 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 authorised." It also mentioned that the pensioner is not required to submit a fresh application for the payment of the difference.
How will this move benefit the central government pensioners?
"Any pensioner, who has chosen to commute their pension post-retirement but the same has been enhanced subsequently with retrospective effect, will be entitled to the difference between the amount paid and the amount payable per the enhanced value," said Pratyush Miglani, Managing Partner, Miglani Verma & Co.
"Assuming for instance, a central government employee's total pension payable for 10 years is Rs 20,00,000. Now, he commutes 40 per cent of his pension at once and the value paid accordingly is Rs 8,00,000. Subsequently, his pension is revised and the total pension payable for the same duration is now Rs 25,00,000. As per the revised pension, he must have been paid Rs 10,00,000. As clarified by the said Office Memorandum, he will be entitled to an additional Rs 2,00,000," explained Miglani.
Additionally, the pensioners who retired during 01.01.2016 till 04.08.2016, i.e., the date of issue of orders for revised pay/pension based on the recommendations of the 7th CPC, may be given an option, in relaxation of Rule 10 of CCS (Commutation of Pension), Rules, 1981, not to commute the pension which has become additionally commutable on revision of pay/pension on implementation of recommendations of the 7th CPC. What it means is that a central government employee's pension was increased after revision due to pay commission recommendations, he will now have the flexibility to decide whether to go for additional commutation.
However, this flexibility will not be available to a pensioner who has commuted pension after the revised pension. "The cases where the additional pension after 7th CPC has already been commuted will not be re-opened," DoPPW added.
In cases where the pension was authorised on retirement before 01 01.2016 and the pensioner applied for commutation on or after 01.01 2016, the pension which was originally sanctioned at the time of retirement only will be allowed to be commuted, DoPPW stated.
On Dearness Relief
Department of Pension & Pensioners’ Welfare also clarified that the Dearness Relief is payable on the original basic pension before commutation or such basic pension before commutation as revised on implementation of recommendations of Pay Commission etc. It is not payable on the pension as reduced after the deduction of commuted pension. It made this clarification via a separate notification issued on October 25, 2022.
This story originally appeared on: India Times - Author:Tax Cognition
