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Know your Retirement Benefits - Pension

Written By Admin on May 14, 2011 | Saturday, May 14, 2011

          Pension is admissible to permanent employees who retire with a qualifying service of not less than 10 years. Temporary employees who retire on superannuation or invalidation after rendering not less than ten years of service or retire voluntarily after 20 years of service are also eligible for pension.
A Govt. servant retiring in accordance with the provisions of the CCS (Pension) Rules,1972 before completing qualifying service of ten years shall not be entitled to pension but he shall be entitled to service gratuity.
W.e.f. 1.1.2006, linkage of full pension with 33 years of qualifying service shall be dispensed with. Once a Govt. servant has rendered the minimum qualifying service of 20 years, he shall be entitled to full pension.
Emoluments for Pension
Emoluments for calculating pension include Pay, Grade Pay, Stagnation increment and Non Practising Allowance

Amount of Pension
W.e.f 1.1.2006, Pension shall be paid 50 % of the emoluments (pay last drawn) or 50% of average emoluments received during the last 10 months, whichever is more beneficial to the retiring employee.

Example:-
Date of Retirement: 31.1.2009
Qualifying Service: 23 years
Pay Drawn during last ten months:-
1.4.08 to 30.6.08: Rs.23400 per month
1.7.08 to 31.1.09: Rs.24110 per month
Calculation:
23400x3= 70200
24110x7= 168770 Total= 238970
Average emoluments: 238970/10= Rs.23897
Pension: 50% of Last Pay Drawn i.e. 24110/2=Rs.12055 or 50% of Average
Emoluments i.e. 23897/2=11948.50 i.e. Rs.11949
Therefore, pension shall be which is more beneficial i.e. Rs.12055

Minimum & Maximum Pension
The amount of pension shall be subject to a minimum of Rs.3500/- and maximum upto 50% of highest pay in the Government (The highest pay in the Govt. is Rs.90000 since 1.1.2006).

Retirement/Death Gratuity
Retirement Gratuity is admissible to all employees who retire after completion of 5 years of qualifying service at the rate of óne-fourth’ of emoluments for each completed six monthly period of qualifying service subject to maximum of 16 ½ times of the emoluments.

Emoluments for Gratuity
Emoluments for the purpose of all types of gratuities shall include Pay, Grade Pay and Dearness Allowance.

Maximum amount of Gratuity
Maximum limit of gratuity has been raised from 3.50 lacs to 10 lacs for the persons retiring on or after 1.1.2006 by the 6th Pay Commission.

Examples:- 
a) 33 Years or more Qualifying Service:-
Emoluments: Pay plus Grade Pay plus DA: Rs.20000+5400+4064=Rs.29464
Gratuity= 29464x1/4x66= Rs.486156
b) 22 ½ Years of Qualifying Service i.e. less than 33 years of qualifying service:-
Gratuity=29464x1/4x45= Rs.331470

Death Gratuity
Death Gratuity is paid to the family of Govt. servant who dies while in service at the rates given below:-

a) Less than 1 year service:   2 times of emoluments.
b) One year or more but less
    than 5 years:                    6 times of emoluments.
c) 5 years or more but less
    than 20 years:                 12 times of emoluments.
d) 20 years or more:             Half the emoluments for every completed six monthly
                                          period of qualifying service subject to a maximum of
                                          33 years of emoluments.
Family Pension is payable to the family of an employee/pensioner on his death in service/after retirement.

Emoluments for Family Pension
Same as for Pension

Normal Family Pension
Family Pension shall be calculated at a uniform rate of 30% of Last Pay Drawn in all cases.

Enhanced Family Pension
Higher rate of Family Pension is admissible if the deceased had rendered not less than seven years of service. It is payable from the date following the date of death of the pensioner for a period of seven years or up to the date on which he would have attained the age of 67 years had he/she survived, whichever is less. In case of death while in service, the enhanced family pension will be admissible for a period of ten years without any upper age limit.

Minimum and Maximum amount of Family Pension
Family Pension shall be minimum of Rs.3500 per month and maximum of 30% of the highest pay in the Government (The highest pay in the Govt. is Rs.90000 since 1.1.2006.

Commutation of Pension:
Every pensioner is eligible to commute a portion of his monthly pension for a lump sum payment which is the commuted value of that portion of pension. An employee or pensioner against whom departmental or judicial proceedings are pending is not eligible to commute a portion of his pension till completion of such proceedings.

Amount admissible:-
Not exceeding 40% of monthly pension. Any fraction in the amount offered for commutation will be ignored; e.g. if the monthly pension is Rs. 12000 then the maximum amount admissible for commutation is:
Rs. 12000 x 40/100 = Rs.4800.
Commutation Amount is calculated w.r.t the Commutation factor taken from Commutation Table as relevant to the age next birthday.
The formula for working out the lump sum payable is as follows:
Amount of pension offered for Commutation x 12 x Commutation factor

Example: 
Amount of pension offered for Commutation = Rs. 4800
Age next birthday = 61 years
Commutation Factor = 8.194
Lump sum Payable = 4800x 12 x 8.194 = Rs.471974.
The reduction in the amount of pension on commutation will become operative from the date of receipt of the commuted value by the pensioner, or at the end of three months after the issue of authority for payment, whichever is earlier.
The restoration of the commuted portion of pension will be admissible on completion of 15 years, for which the pensioner should apply to the pension disbursing authority i.e., Post office / Bank in the prescribed proforma.

Encashment of Earned leave:
Lump sum cash equivalent of leave salary admissible for the number of days of earned leave at the credit of the employee on the last day of his service, subject to a maximum of 300 days including the number of days for which encashment was availed along with LTC, is granted by the authority competent to sanction leave. The amount of leave encashment payable is worked out in the following manner.

Pay plus Grade Pay plus DA admissible on the date of cessation of service x No. of days of EL at credit
Example: 
Date of Retirement = 31.10.2008
EL at credit = 300 days
Pay plus GP = Rs. 20000
DA = 21%
Lumpsum admissible = (20000+4200)x300/30= 284000 
On retirement the employee will be paid as per the Table of benefits –
(i) lumpsum due to his out of the Savings Fund for entire period of membership in the lowest group; and
(ii) amount due to him for the additional units by which subscription was raised due to promotion – for the period from which the rate was raised, to the date of cessation of membership. `
 
 
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