Gujarat reduces commuted pension restoration period to 13 years

The Government of Gujarat (finance department) has notified the restoration of full pension after 13 years of retirement for pensioners who have commuted part of their pension at the time of retirement.The move is expected to benefit pensioners who have already received commuted value of part of their pension. In case of the pensioners who have received commuted value of part of their pension and completed 13 years or more,their pension will be restored from the month of October 2022,stated the notification. Commutation of pension is a process under the Old Pension Scheme whereby pensioners are allowed to sell a part of their pension and receive a lump-sum amount that is actually the net present value of the monthly pension of the next 15 years. After completion of said time frame, the original pension is restored.

The quantum of lump sum that one receives after commutation depends on the commutation factor, which in turn is linked to the age of the pensioner. For instance, the commutation factor is 10.13 for a 60-year-old pensioner, which means that the lump sum amount will be 10.13 times of the annual pension forgone. So, if such a pensioner decides to sell Rs 10,000 per month from pension or Rs 1.2 lakh per annum, the lump sum amount will be Rs 12.15 lakh. After selling this pension, the monthly pension will be reduced by Rs 10,000 which will be restored after 15 years.

(Ira Singh, Asstt Editor, Gandhinagar)