Commuted Pension Calculator

Calculate the lump sum you can receive from your pension and plan your retirement finances effectively

💰 Commuted Pension Calculator

Commuted Value of Pension

₹ 0.00

Reduced Monthly Pension

₹ 0.00

📊 Pension Breakdown

🧮 Formula & Explanation

1. Formula for Commutation

The lump sum commuted value is calculated using the following formula: 

  Commuted Value = Commuted Portion of Pension × 12 × Commutation Factor
  • Commuted Portion of Pension = (Basic Pension × % Commuted)
  • 12 = Number of months in a year
  • Commutation Factor = Value based on your age at retirement (e.g., 8.194 at age 61, 9.81 at age 55, 12.371 at age 40, etc. as per Govt. tables)
2. Reduced Pension

After commutation, the pensioner’s monthly pension reduces by the commuted portion. The reduced pension is given as: 

  Reduced Monthly Pension = Basic Pension – (Basic Pension × % Commuted)
3. Example Calculation

Suppose a pensioner has:

  • Basic Pension = ₹50,000
  • % Commuted = 40%
  • Commutation Factor = 12

Step 1: Commuted Portion = 50,000 × 40% = ₹20,000
Step 2: Commuted Value = 20,000 × 12 × 12 = ₹28,80,000 (lump sum)
Step 3: Reduced Monthly Pension = 50,000 – 20,000 = ₹30,000

💡 Note: Commutation is optional and pensioners usually commute up to 40% of pension. The lump sum helps with immediate needs, while the reduced pension continues monthly.