Pension Commutation: If you are a government employee then this news can be special for you. Let us tell you that those who choose higher pension under EPS will contribute less on the basis of salary received along with interest received in EPF. They will also contribute more till they exit this scheme. Because they can withdraw a part of their savings.
That is why there will be lump sum savings till the time of retirement of the employees. If more funds are needed after retirement, then this option can be useful. Now the question arises whether one can sell some part of his monthly pension. So that money can be received together.
Let us tell you that this is called pension commutation. This is a process under the Old Pension Scheme. Under this, pensioners are given the opportunity to sell a part of their pension and receive a lump sum amount.
For information, let us tell you that the lump sum amount received after commutation depends on the commutation factor. Which is related to the age of the pension holder. For example, if the age of a pensioner is 60 years, then his commutation factor is 10.13.
This means that the lump sum amount will be 10.13 times the pension given up. On the other hand, if a pensioner gives up a monthly pension of Rs 10,000, then he will receive a lump sum of Rs 12.15 lakh. After giving up this pension, the monthly pension will be less than Rs 10,000, which will be received in lump sum after 15 years.
Let us tell you that this option was given to pensioners in EPS till 2008. After this, this option of commuting pension under the EPF scheme was withdrawn. Now this option is not available. Let us tell you that the pensioners who had chosen the commute option in September 2008, their original amount has been restored after completion of 15 years.