The Haryana Civil Services (Pension) Rules, 2016 under Rules 77 to 79 define how the commutation value of pension is calculated when a government employee opts to receive a portion of pension as a lump sum. The amount is determined by multiplying the portion of pension to be commuted by a fixed commutation factor based on the pensioner’s age next birthday. This factor is drawn from the Government of India’s commutation table, adopted by the Haryana Government.
1️⃣ What Is Commutation Value?
The commutation value represents the present value of the pension that the employee surrenders for a fixed period (15 years) in exchange for a one-time lump-sum payment. It is calculated using a standardized actuarial formula approved by the government.
In simple terms: It converts your monthly pension (for the portion commuted) into a single lump-sum amount, based on your age and life expectancy at retirement.
2️⃣ Rule Reference – Commutation Calculation Basis
| Rule No. | Subject | Description |
|---|---|---|
| Rule 77 | Calculation of commuted value | Defines formula and use of commutation table. |
| Rule 78 | Commutation table | Commutation factor determined by age next birthday. |
| Rule 79 | Medical examination | Required if applying after one year of retirement. |
3️⃣ Formula for Commutation Value (Rule 77)
Official Formula:
Commuted Value = Portion of Pension × 12 × Commutation Factor
Where:
- Portion of Pension = The amount of monthly pension to be commuted (e.g., 40% of basic pension).
- 12 = Number of months in a year (to convert annual pension).
- Commutation Factor = Value taken from the age-wise commutation table (based on age next birthday).
4️⃣ Example Calculation
Example 1:
| Last Basic Pay | ₹70,000 |
| Basic Pension | ₹35,000 (50% of pay) |
| Percentage Commuted | 40% |
| Commuted Portion | ₹14,000 |
| Age Next Birthday | 61 years |
| Commutation Factor (Age 61) | 8.194 |
Calculation:
₹14,000 × 12 × 8.194 = ₹13,16,592
Result: Lump-sum Commutation Value = ₹13,16,592 Remaining Monthly Pension = ₹35,000 – ₹14,000 = ₹21,000
5️⃣ Age-Wise Commutation Factor Table (As per Rule 78)
The following table gives commutation factors used for calculating the commuted value of pension. These are based on the age next birthday of the pensioner (7th CPC table adopted by Haryana):
| Age Next Birthday (Years) | Commutation Factor | Age Next Birthday (Years) | Commutation Factor |
|---|---|---|---|
| 60 | 8.194 | 61 | 8.093 |
| 62 | 7.982 | 63 | 7.862 |
| 64 | 7.731 | 65 | 7.587 |
| 66 | 7.431 | 67 | 7.262 |
| 68 | 7.081 | 69 | 6.887 |
| 70 | 6.672 | 71 | 6.451 |
| 72 | 6.218 | 73 | 5.973 |
| 74 | 5.724 | 75 | 5.472 |
Note: The factor decreases with increasing age because the expected life span shortens, reducing the commutation value.
6️⃣ Maximum Commutation Limit
- Maximum limit = 40% of basic pension (Rule 75).
- Commutation can be made for a lesser portion (e.g., 25%, 30%) if desired by the pensioner.
- Commutation is optional and based on written consent in Form 1A.
7️⃣ Restoration of Commuted Portion
As per Rule 82, the commuted portion of pension is restored automatically after 15 years from the date of commutation.
Example: If the commutation payment was made on 1 April 2025, the full pension (including commuted part) will be restored from 1 April 2040.
8️⃣ Medical Examination Requirement (Rule 79)
- Not required if the employee applies within one year of retirement.
- Mandatory for:
- Those applying after one year of retirement, or
- Invalid pensioners.
- The commutation factor is based on the age at next birthday certified by the Medical Board.
9️⃣ Step-by-Step Calculation Example (Full Illustration)
Case: Employee retires at age 60 years, basic pension ₹50,000, opts to commute 40%.
| Step | Details | Calculation |
|---|---|---|
| 1 | Basic Pension | ₹50,000 |
| 2 | Commuted Portion (40%) | ₹20,000 |
| 3 | Age Next Birthday | 61 years |
| 4 | Commutation Factor (Age 61) | 8.194 |
| 5 | Formula Applied | ₹20,000 × 12 × 8.194 = ₹19,65,600 |
Final Commutation Value: ₹19,65,600 (Lump-sum Payment)
Reduced Monthly Pension: ₹50,000 – ₹20,000 = ₹30,000
10️⃣ Important Points to Remember
- Commutation can be done only once in a lifetime.
- The lump-sum commutation amount is tax-free for government employees.
- No recovery is made from family pension if the pensioner dies before 15 years.
- Commutation payment is disbursed along with DCRG and first pension through Treasury or Bank.
- The commutation factor table is subject to revision after pay commission recommendations.
✅ Quick Reference Summary (Rules 77–79)
| Rule | Subject | Key Point |
|---|---|---|
| 77 | Commutation Formula | Pension × 12 × Factor |
| 78 | Age-wise Table | Factor decreases with age |
| 79 | Medical Exam | Required if after 1 year of retirement |
| 82 | Restoration | After 15 years from commutation date |
FAQs – Commutation Value of Pension
1. What is the formula to calculate commuted value of pension?
Commuted Value = Portion of Pension × 12 × Commutation Factor
2. What is the maximum pension that can be commuted?
Up to 40% of basic pension.
3. How is age determined for commutation?
Age next birthday on the date of commutation (certified by the Medical Board if required).
4. Is commuted pension amount taxable?
No. It is completely exempt from income tax for government employees.
5. When is full pension restored?
After 15 years from the date of commutation.
6. What if the pensioner dies before 15 years?
No recovery is made. Family pension continues normally.
Conclusion
The Commutation Value of Pension is a crucial financial benefit that converts a portion of monthly pension into a lump sum. Under Rules 77–79 of the Haryana Civil Services (Pension) Rules, 2016, the formula and age-based commutation table make the process transparent and predictable. Employees should decide carefully how much pension to commute, balancing immediate needs and long-term income stability.
Source: Official Haryana Civil Services (Pension) Rules, 2016 – Finance Department, Government of Haryana.