Wednesday, November 23, 2011

Pension Useful Information

Type Of pension
Family Pension
Voluntary Retirement (VR )

The qualifying service for evaluation of pension is reduced to 20 years w.e.f. 01.09.2008. Earlier it was 33 years.

Pension is evaluated on the basis of the last 10 months average pay or last pay drawn whichever is beneficial to retiring employee

Terms related to the PENSION Calculation

DCRG (Death Cum Retirement Gratuity)


The pension amount is calculated based on the Basic Pay at the time of retirement, Age, Service years, etc. It is calculated as 50% of average emoluments of last 10 months salary drawn. It is calculated on Basic and Dearness Pay only
Formula for Calculation of Pension Amount =
50% of Avg. emoluments (last 10 months*SMP/66
This is basically known as Gratuity. Gratuity is the amount given to the employee at the time of retirement.

It is calculated on Basic, DP and DA.

This amount is limited to maximum Rs.3,50,000 / - only.

Formula for Calculation of DCRG

Last Salary Drawn X SMP
_______________________________ 4

last Salary Drawn X SMP
(in case of Death)

At the time of retirement of the employee, a portion of pension can be withdrawn by the employee.

A maximum of 40% of pension amount can be withdrawn at the time of retirement. However, depending on the amount withdrawn proportionate amount will be deducted from the Pension amount till 15 years and employee will get reduced Pension till 15 years
Formula for calculation of Commutation
Commutation Percent of Full Pension x Age Factor x 12

Formula for calculation of Reduced Pension
Full Pension – Commutation Percent of Full Pension) + DA on Full Pension

The commuted portion of pension shall be restored on expiration of 15 years from the date of retirement. After this period the employee is entitled for full pension.


In case of death of retired employee, his/her pension is entitled to his/her family or the nominees fixed by the employee. The wife is entitled till her remarriage or death whichever is earlier. In case of Son/Daughter, children are entitled till an age of 25 years or marriage, whichever is earlier
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