Friday, 6 May 2016

Restoration of Commutation of Pension to be reduced from 15 years to 12?

There is a grey area in the restoration of commutation of pension. Para 10.1.43 of the 7th CPC Report stated that The Supreme Court in its judgement specifically stated that though the amount is recovered in 12 years, yet since there is a risk factor and some of the states are restoring pension after 15 years, the period of restoration is fixed at 15 years. The V CPC in its recommendation increased the percentage of commutation to 40 percent and recommended restoration period at 12 years. But the reduction of restoration period was not accepted by the government. The VI CPC did not recommend any change in the maximum percentage of commutation allowed or in the period of restoration. This Commission also does not recommend any change either in the maximum percentage of commutation or in the period of restoration.”

Supreme Court already examined the case and stated that the commuted value is recovered in 12 years. While the case was considered, since some states are following 15 years, it followed the same. Further, after the Supreme Court case,  the percentage of commutation was increased to 40 percent. But it was the duty of the CPCs to consider the issue particularly when later on superannuation age is increased by the Central government from 58 to 60 years, irrespective of the fact that many states are following age 55/56 for superannuation. Therefore, it is high time that the restoration of the commutation value is reduced to 12 years. Therefore, it is expected that the anomaly is removed while implementing the 7th Pay Commission Report.

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  1. This would be a good decision for the pensioners but since this effect would become prospective in effect, the people who retired earlier would not be benefitted by this.

  2. Yes. Those pensioners who retired could not avail this . Further, some of them, restored their commutation after recovery of 15 years.

  3. Why prospective? There can be a Rule from a restropective date which doesn't adversely affect anyone.