Comrade ,
Eligible- Rule position:
Basically, all the Central Government Employees are eligible to commute
a percentage of his monthly pension amount, a Government servant shall be
entitled to commute for a lump sum payment of an amount not exceeding 40% of
his pension. If percentage of pension to be commuted results in fraction of a
rupee, such fraction of a rupee shall be ignored for the purpose of commutation
– Rule 5
No Government servant against whom
departmental or judicial proceedings, as referred to in Rule 9 of the Pension
Rules, 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 be eligible to commute a percentage of his provisional pension authorised
under Rule 69 of the Pension Rules or the pension, as the case may be, during
the pendency of such proceedings – Rule 4
Commutation of Pension Formula
Total
Commutation Amount = Commuted Amount x
Commutation Factor x 12
Commutation Factor : In the CCS (Commutation of Pension) Rules, the Commutation factor
value is given for different ages, this table value is effective from
1.1.2006.
Commutation
Factor Table
Two Tables
available for Central Government Employees –
·
Table 1 is effective from 1.3.1971 – till 1/1/2006 - This Table is based on
a rate of interest of 4.75 per cent per annum
Commuted Value
(CVP) = 0.4(Maximum) x P x CF x 12
where
P = Pension Ordered
CF = Commutation Factor
For example in 1971
table 1 for employees retiring at 60 years they get a factor of 9.81
·
Table 2 is effective from 1.1.2006 as per the 6th Pay Commission
The table is based on a rate of interest on Commutation of
Pension is 8.00% per annum. [Basic: LIC(94-96) Ultimate
Tables and 8.00% interest]
For example in 2006 table 2 for
employees retiring at 60 years they get a factor of 8.194.
Commutation
of Pension Illustration as per
table 1:
Note :Commuted Amount : Government Employee pension amount
is Rs.32000/- at the time of retirement, he / she commuted 40% of his
pension, then the commuted amount is 40 percent of Rs.32000 i.e. 12800 is
the commuted amount here.
Commuted
Amount = Rs. 12800/-
Commuted
Factor = Take Example, Age
Next birthday is 61 years, then the commutation value is 9.81 as per
the Commutation
Table
Total Commutation Amount = 12800 X 9.81 x 12
Total Commutation Amount = Rs 15,06,816 /-
Commutation of
Pension Illustration as per table 2:
Commuted
Amount = Rs. 12800/-
Commuted
Factor = Take Example, Age
Next birthday is 61 years, then the commutation value is 8.194
as per the Commutation Table
Total Commutation Amount = 12800 X 8.194 x 12
Total Commutation Amount = Rs 12,58,598/-
So the pensioners are losing the Commutation Amount due to higher interest rates.
If any employee / pensioner does
not avail the Commutation of pension in that
case he gets Rs 12800 X 180 months =
23,04,000/ - instead of lump sump amount of Rs 12,58,598/-
Now the Government and
LIC itself has lowered the interest rates from past fifteen years especially
in last five years on small savings and LIC pension policy they should have a new Commutation Table – 3 and Commutation Value with effect from1/1/
2020.
The
interest 1/1/2006 was of 8.0%
in Public Provident Fund (PPF), 9.2
% in Senior Citizen Saving Scheme (SCSS), 11.3 % in National Saving Certificate (NSC)
The
interest 1/1/2016 was of 8.1% in Public Provident Fund (PPF),
8.6 % in Senior Citizen Saving Scheme (SCSS), 8.1 % in National Saving Certificate (NSC) .
LIC Pradhan Mantri Vaya Vandana Yojana (PMVVY) interest rate was 10%
The
interest as on 1/1/2020 is of 7.1% in Public Provident Fund (PPF),
7.4% in Senior Citizen Saving Scheme (SCSS), 6.8% in National Saving Certificate (NSC).
Even LIC of India has lowered its interest rates to 6.8%. LIC Pradhan Mantri Vaya Vandana Yojana
(PMVVY) interest rate is 7.4 % , LIC Jeevan Shanthi scheme provides 6%
interest.
Hence
there is a need to have a new Commutation Table number 3 with effect from
1/1/2020 considering the interest rates of 6.5 % instead of 8%.
Restoration of Commuted
Portion of Pension- Rule position:
The
commuted amount of pension shall be restored on completion of 15 years from the
date the reduction of pension on account of commutation becomes operative in
accordance with rule 6:
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 pension shall
be restored on completion of fifteen years from the respective date(s)
Demands:
1) Since already the Employees / Pensioners are paid
less amount as the interest for commutation amount is deducted already at the
time of making commutation payment through a commuted factor, there is no point
for Restoration of Commuted Portion of Pension after 15
years.
2) Restoration of Commuted Portion of Pension
should ideally be done after 12 years.
3)
A new Commutation Table -3 with effect from
1/1/2020 as the lowering of interest rates has taken place especially last five
years from 2016 onwards as Government and LIC itself has lowered the interest rates from
past fifteen years, especially in last five
years on
small savings and LIC pension policies
4) The Commutation Table -3 should
have interest rates of 6.5 % instead of present 8% and Commutation Values shall be recalculated.
5) The Commutation
Table and Commutation Value should be
revised every 10 years as last revision has taken place in the year 2006 , now
15 years are over the revision is imminent due to lowering in interest rates by Central Government and
LIC .
Comradely yours
(P.S.Prasad)
Working President
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