Big news for government employees. The Confederation of Central Government Employees and Workers, which represents around seven lakh central government employees, has reached out to the Cabinet Secretary to request a reduction in the commutation of pension restoration period from 15 years to 12 years. In a letter, General Secretary SB Yadav has asked for updated commutation tables for central government employees and pensioners, noting that many factors affecting these tables have changed over the past 38 years. Additionally, various central employees’ unions and the employees’ wing of the National Council (JCM) have echoed this demand.
Regarding pension commutation, employees can choose to commute up to 40 percent of their basic pension upon retirement. This allows them to receive 40 percent of their pension in advance from the government, which then deducts Rs 8,000 annually from their pension until the amount is fully recovered. Previously, this deduction continued until the end of the pensioner’s life, but under the new system, it lasts for 15 years post-retirement, after which the employee receives their full pension. Central government employees have the option to convert more than 40 percent of their pension into a lump sum. If they opt for commutation within a year of retiring, they are exempt from a medical examination.
Once the commuted pension is credited to the applicant’s bank account, the pension deduction begins. The maximum limit for commuted pension is one-third of the total pension. If an employee opts for commutation under section 12A, they will receive their full pension after 15 years of retirement. Shiv Gopal Mishra, Secretary of the National Council (Employees’ Side) of the Joint Consultative Machinery (JCM), has also presented 14 demands to the government concerning various unresolved issues affecting central government employees, including the request to shorten the restoration period.
Many state governments are reinstating the adjusted pension share after a span of 12 years. There seems to be no valid reason for imposing a 40 percent deduction on commuted pensions for a duration of 15 years. In light of this, the government ought to restore the commuted pension 12 years following the date of commutation. SB Yadav, the general secretary of the Confederation of Central Government Employees and Workers, has urged the introduction of new commutation tables for central government employees and pensioners. The Federation has highlighted the directives issued by the Government of India in 1986 concerning the restoration of commuted pensions after 15 years, which was established by amending Rule 10A of the Central Civil Services (Commutation of Pension) Rules, 1981.
These rules were created 38 years ago in 1986. Compared to the conditions that existed back then, many factors have significantly changed today, especially regarding interest rates, life expectancy, mortality rates, and associated risks. While commutation is a choice, the government, as a ‘model employer,’ should view it as a welfare initiative rather than a profit-making endeavor. Pensioners typically opt for commutation to meet their financial obligations. The government’s approach towards its employees, who have dedicated over 30 years to nation-building, should be compassionate, particularly towards pensioners. As a model employer, the central government should not prioritize profit in addressing the commutation issue and restoring the commuted pension value.
Numerous expert organizations have made suggestions on this matter. The Kerala government has implemented a 12-year restoration policy. Recently, after reviewing all relevant factors, the Gujarat government has opted for a 13-year restoration period. The 5th Central Pay Commission, in paragraph 136.10 (page 1822), recommended a 12-year restoration of commutation following a comprehensive analysis. However, the Central Government has yet to accept this recommendation.
