Commutation of Pension: RBE No.13/2023 – Clarification

No.D-43/29/2022-F(E)III, dated 12.01.2023

Sub: Clarifications on Railway Services (Commutation of Pension) Rules, 1993 – reg. 

1.     Copies of Department of Pension & Pensioners’ Welfare (DOP&PW)’s O.M. Nos.

(a) 42/15/2022-P&PW(D)/2, dated 25.10.2022,

(b) 42/15/2022-P&PW(D)/3, dated 25.10.2022,

(c) 42/15/2022-P&PW(D)/4, dated 25.10.2022,

(d) 42/15/2022-P&PW(D)/5, dated 25.10.2022,

(e) 42/15/2022-P&PW(D)/6, dated 31.10 2022,

(f) 42/15/2022-P&PW(D)/7, dated 31.10.2022,       

are enclosed for information and guidance. These instructions shall apply mutatis mutandis on the Railways also. The Central Civil Services (Commutation of Pension) Rules, 1981 correspond to Railway Services (Commutation of Pension) Rules, 1993. FR-56(a) corresponds to Rule 1801 contained in Indian Railway Establishment Code, Vol.II [1987 Edition].

2.     The Railway Board’s instructions/ Railway Services (Commutation of Pension) Rules, 1993 corresponding to DOP&PW’s instructions/ CCS (Pension) Rules, 1981 referred to in their aforesaid OMs are given below:- 

S. No.	DOP&PW’s instructions/ Central Civil Services (Commutation of Pension) Rules, 1981	Corresponding Railway Board’s instructions/ Railway Services (Commutation of Pension) Rules, 1993
1	Rule 6(1)(i-a) of CCS (Commutation of Pension) Rules, 1981	Rule 7(ii) of Railway Services (Commutation of Pension) Rules, 1993
2	Rule 5 of CCS (Commutation of Pension) Rules, 1981	Rule 6 of Railway Services (Commutation of Pension) Rules, 1993
3	Rule 10 of CCS (Commutation of Pension) Rules, 1981	Rule 11 of Railway Services (Commutation of Pension) Rules, 1993
4	Rule 10A of CCS (Commutation of Pension) Rules, 1981	Rule 11A of Railway Services (Commutation of Pension) Rules, 1993
5	OM No.42/14/2016-P&PW(G), dated 24.10.2016	Letter No.2016/F(E)III/1/(1)8, dated 02.11.2016 (RBE No.128/2016)
6	Rule 6 of CCS (Commutation of Pension) Rules, 1981	Rule 7 of Railway Services (Commutation of Pension) Rules, 1993

3. Please acknowledge receipt.

Ministry of Personnel, PG & Pensioners

Department of Pension and Pensioners’ Welfare

OM No.42/15/2022-P&PW(D)/2, dated 25.10.2022

OFFICE MEMORANDUM

Sub: Clarification regarding commutation value for Government servant whose date of birth is the first of a month and who retires on the afternoon of the last day of the preceding month – reg.

1. In accordance with proviso to Fundamental Rule [FR-56(a)], a Government servant whose date of birth is the first of a month shall retire from service on the afternoon of the last day of the preceding month.

2. References/ Representations have been received in this Department seeking clarification as to which commutation value is to be taken in cases where a Government servant whose date of birth is first of a month and who retires from service on the afternoon of  the last day of the preceding month.

3. In such cases, pension becomes due from the day following the date of retirement. Further, as per Rule 6(1)(i-a) of CCS (Commutation of Pension) Rules, the commutation of pension shall become absolute on the day following the date of retirement. Therefore, the retiring Government servant will be eligible for commutation of pension on the day following the date of his retirement and the commutation value expressed as number of year’s purchase will be age on next birthday.

4. Accordingly, in the case of such Government servants who retire on attaining the age of 60 years, the age next birthday will be 61 years, including in cases where the date of birth is first of a month and the Government servant retires on the afternoon of the last day of the preceding month. Therefore, the commutation value of 61 years (i.e. age on next birthday) will be applicable in this case.

Ministry of Personnel, PG & Pensioners

Department of Pension and Pensioners’ Welfare

OM No.42/15/2022-P&PW(D)/3, dated 25.10.2022

OFFICE MEMORANDUM

Sub: Clarification regarding pension to be taken for commutation after retirement – reg.

1. In accordance with Rule 5 of CCS (Commutation of Pension) Rules, 1981, a Government servant can commute for a lump-sum payment of an amount not exceeding 40 per cent of his pension.

2. Doubts have been raised as to which pension i.e. pension authorized at the time of retirement or the pension revised subsequently and payable at the time of application for commutation shall be allowed to be commuted.

3. As per Rule 10 of CCS (Commutation of Pension) Rules, 1981, an applicant who has commuted a percent 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 authorized. For the payment of difference, the applicant shall not be required to apply afresh.

4. This Department’s OM No.42/14/2016-P&PW(G), dated 24.10.2016 provides that those pensioners who retired from 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. The cases where the additional pension after 7th CPC has already been commuted will not be re-opened.

5. In cases where the pension was authorized 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 or retirement only shall be allowed to be commuted.

Ministry of Personnel, PG & Pensioners

Department of Pension and Pensioners’ Welfare

OM No.42/15/2022-P&PW(D)/4, dated 25.10.2022

OFFICE MEMORANDUM

Sub: Deduction of commuted pension from the pension revised in implementation of recommendations of Pay Commission etc.

1. In accordance with Rule 5 of CCS (Commutation of Pension) Rules, 1981 a Government servant can commute for a lump-sum payment of an amount not exceeding 40 per cent of his pension.

2. The amount of pension so commuted is deducted from subsequent monthly pensions. References have been received in this Department as to what amount shall be deducted from pension in cases where the pension is subsequently revised on implementation of recommendations of Pay Commission, etc.

3. It is clarified that in such cases, the portion/ amount of pension which was originally commuted shall only be deducted from the revised pension.

Ministry of Personnel, PG & Pensioners

Department of Pension and Pensioners’ Welfare

OM No.42/15/2022-P&PW(D)/5, dated 25.10.2022

OFFICE MEMORANDUM

Sub: Clarification regarding whether deductions towards commutation are required to be made from family pension for the remaining period in cases where the pensioner dies before the restoration of commuted pension – reg.

1. In accordance with Rule 5 of CCS (Commutation of Pension) Rules, 1981, a Government servant can commute for a lump-sum payment of an amount nor exceeding 40 per cent of his pension. Further, in accordance with Rule 10-A of CCS (Commutation of Pension) Rules, 1981 the commuted amount of the pension shall be restored on completion of fifteen years from the date of reduction of pension on account of commutation becomes operative in accordance with Rule 6.

2. References/ representations have been received in this Department seeking clarification whether deduction towards commutation are required to be made from family pension for the remaining period in cases where the pensioner dies before the restoration of commuted pension.

3. It is clarified that in such cases monthly commuted amount of pension is not required to be deducted from family pension and family pension shall be paid in full without any deduction in this regard.

Ministry of Personnel, PG & Pensioners

Department of Pension and Pensioners’ Welfare

OM No.42/15/2022-P&PW(D)/6, dated 31.10.2022

OFFICE MEMORANDUM

Sub: Commutation of pension on more than one occasion – Clarification regarding.

1. In accordance with Rule 5 of CCS (Commutation of Pension) Rules, 1981, a Government servant can commute for a lump-sum payment of an amount not exceeding 40 per cent of his basic pension.

2. References/ representations have been received in this Department seeking clarification whether it is permissible for a person, who has commuted a percentage of his basic pension which is less than 40% of his basic pension, to commute a percentage of basic pension on a second or subsequent occasion within the overall maximum limit of 40%.

3. 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 authorized. For the payment of difference, the applicant shall not be required to apply afresh. This Department’s OM No.42/14/2016-P&PW(G), dated 24.10.2016 provides that those pensioners who retired from 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 or 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.

4. There is, however, no provision in the Central Civil Services (Commutation of Pension) Rules, 1981 for commutation of a percentage of basic pension on a second or subsequent occasion within the overall maximum limit of 40%, if the pensioner had originally commuted a percentage of his basic pension which was less than 40% of his basic pension.

5. The above clarification may be brought to the notice of the personnel dealing with the pensionary benefits in the Ministry/ Department and attached/ subordinate offices thereunder, for strict implementation.

Ministry of Personnel, PG & Pensioners

Department of Pension and Pensioners’ Welfare

OM No.42/15/2022-P&PW(D)/7, dated 31.10.2022

OFFICE MEMORANDUM

Sub: Interest on delayed payment of commuted value of pension – Clarification regarding.

1. In accordance with Rule 5 of CCS (Commutation of Pension) Rules, 1981, a Government servant can commute for a lump-sum payment of an amount not exceeding 40 per cent of his pension. In cases where a Government servant has applied for commutation of pension before superannuation, the commuted value of pension is to be paid at the time or retirement. In other cases, the commuted value of pension should be paid as soon as possible after it has become absolute.

2. References are received in this Department seeking clarification whether any interest is required to be paid to the retired Government servant in cases where there is a delay in payment of commuted value of pension after it has become absolute.

3. It is clarified that in accordance with Rule 6 of the CCS (Commutation of Pension) Rules, 1981, in cases where the commuted value of pension is paid after retirement, the reduction of the amount of commuted pension from the monthly pension becomes operative from the date on which the Commuted value of pension is paid.  As per Rule 10-A of CCS (Commutation of Pension) Rules, the commuted amount of the pension is restored on completion of fifteen years from the date the reduction of pension on account of commutation becomes operative in accordance with Rule 6. Since the pensioner continues to receive full pension till the date of payment of commuted value of pension, the question of payment of any interest on delayed payment of commutation of pension does not arise.

4. The above clarification may be brought to the notice of the personnel dealing with the pensionary benefits in the Ministry/ Department and attached/ sub-ordinate offices thereunder, for strict implementation. The above provisions of the rules may also be suitably incorporated in the replies to be filed in the court cases on this issue.

Download Railway Board Circular RBE No.13/2023