Convert up to 40% of your basic pension into a tax-free lump sum and see exactly what it costs you. Uses the official commutation factor table notified under the CCS (Commutation of Pension) Rules 1981, with your reduced pension, restoration date and break-even point worked out in full.
Basic pension sanctioned in your PPO — not the amount credited to your bank account, which includes Dearness Relief. Don't know it yet? Work it out on the pension calculator.
Read against the birthday following the date commutation becomes absolute. Retiring on superannuation at 60 means age next birthday 61 — including if you were born on the 1st of a month.
Civil pensioners: maximum 40%. Defence pensioners: up to 50%. Bank employees: one third.
DR is calculated on the full original basic pension, never on the reduced one.
Normally the day after your date of retirement. Add it to get your exact restoration date fifteen years later.
Your lump sum, reduced pension and restoration date will appear here instantly.
Commutation is the capitalisation of a fraction of your monthly pension: you surrender part of your pension for fifteen years and receive its present value now, as a single tax-free payment. The arithmetic is fixed by rule and there is no discretion in it.
Dearness Relief continues to be worked out on your full original basic pension, not on the reduced figure. In the example above, commuting 40% cuts basic pension by ₹20,000 but the DR component is untouched. This is why the real reduction in your monthly credit is proportionally smaller than the percentage you commuted — and it grows smaller still as DR rises over the fifteen years.
These are the commutation values notified under the CCS (Commutation of Pension) Rules 1981, effective for commutations that became absolute on or after 2 September 2008. The values are derived from the LIC (94–96) Ultimate Mortality Tables at an interest rate of 8% per annum, and are expressed as the number of years' purchase.
| Age Next Birthday | Factor | Age Next Birthday | Factor | Age Next Birthday | Factor |
|---|
Pensioner associations have repeatedly asked for a fresh table, arguing that the 8% interest assumption is out of step with prevailing rates and that a revised table has been due since 2018. Some representations also seek a reduction of the restoration period from fifteen years to twelve. Nothing has been notified — the 2008 table remains in force as of August 2026.
The factor is not read against your age at retirement. Rule 8 requires it to be taken against your age on the next birthday following the date on which commutation becomes absolute — normally the day after you retire.
For an employee retiring on superannuation at 60, the next birthday is the 61st, so the applicable factor is 8.194, not the 8.287 listed against age 60. Applying 8.287 would overstate the lump sum; applying 7.731 (age 65) would understate it substantially.
FR 56(a) retires you on the last day of the preceding month, which has led some offices to apply a different factor. A DoP&PW clarification dated 25 October 2022 settled the point: where a government servant retires on attaining the age of 60, the age next birthday is 61 and the factor is 8.194, including in cases where the date of birth is the first of a month and retirement falls on the last day of the preceding month. If your office applied a lower factor, the shortfall is recoverable. Confirm your dates on the retirement date calculator.
Strip away the complexity and the trade is simple. You receive a lump sum equal to roughly 8.2 years' worth of the pension you give up, and you give it up for 15 years. The break-even period is therefore approximately the commutation factor itself.
| Age Next Birthday | Factor | Break-Even (years) | Years of Excess Recovery |
|---|---|---|---|
| 56 | 8.572 | ≈ 8.6 | ≈ 6.4 |
| 58 | 8.446 | ≈ 8.4 | ≈ 6.6 |
| 61 (retirement at 60) | 8.194 | ≈ 8.2 | ≈ 6.8 |
| 65 | 7.731 | ≈ 7.7 | ≈ 7.3 |
| 70 | 6.897 | ≈ 6.9 | ≈ 8.1 |
Commutation is not all-or-nothing. You may commute any percentage up to the 40% limit, and many retirees choose 20% or 25% — enough to meet a specific defined need without cutting monthly income more than necessary. Move the slider in the calculator above to see the trade-off at each level before you fill in Form 1.
| Basic Pension | Commute 20% | Commute 30% | Commute 40% | Reduced Basic at 40% |
|---|---|---|---|---|
| ₹9,000 | ₹1,76,990 | ₹2,65,486 | ₹3,53,981 | ₹5,400 |
| ₹15,000 | ₹2,94,984 | ₹4,42,476 | ₹5,89,968 | ₹9,000 |
| ₹20,000 | ₹3,93,312 | ₹5,89,968 | ₹7,86,624 | ₹12,000 |
| ₹25,000 | ₹4,91,640 | ₹7,37,460 | ₹9,83,280 | ₹15,000 |
| ₹28,050 (Level 10) | ₹5,51,644 | ₹8,27,466 | ₹11,03,289 | ₹16,830 |
| ₹30,000 | ₹5,89,968 | ₹8,84,952 | ₹11,79,936 | ₹18,000 |
| ₹40,000 | ₹7,86,624 | ₹11,79,936 | ₹15,73,248 | ₹24,000 |
| ₹50,000 | ₹9,83,280 | ₹14,74,920 | ₹19,66,560 | ₹30,000 |
| ₹61,550 (Level 13) | ₹12,10,557 | ₹18,15,836 | ₹24,21,114 | ₹36,930 |
| ₹72,100 (Level 14) | ₹14,18,043 | ₹21,27,065 | ₹28,36,086 | ₹43,260 |
| ₹1,00,000 | ₹19,66,560 | ₹29,49,840 | ₹39,33,120 | ₹60,000 |
| ₹1,25,000 (ceiling) | ₹24,58,200 | ₹36,87,300 | ₹49,16,400 | ₹75,000 |
Armed forces pensioners may commute up to 50% of pension, against 40% for civil pensioners. Commutations on or after 2 September 2008 use the same revised table of commutation values. Because defence personnel typically retire much earlier than 60, the applicable factor is higher — an officer with age next birthday 56 uses 8.572 — which produces a larger lump sum per rupee of pension surrendered.
Employees retiring under the Bank Employees' Pension Regulations 1995 may commute a maximum of one third of basic pension, and the applicable table is different from the CCS one — its values run far higher, from 19.26 at age 17 down to 3.13 at 85, because it is constructed on a different interest basis. Restoration is likewise after fifteen years. Do not apply the CCS table to a bank pension.
Most states follow the central architecture but the commutable fraction varies, commonly between one third and 40%, and some states retain older factor tables. Check your own state's commutation rules before relying on the figures above.
Commuted value = the portion of basic pension you commute × 12 × the commutation factor for your age on next birthday. On a basic pension of ₹50,000, commuting the full 40% at age 60 gives ₹20,000 × 12 × 8.194 = ₹19,66,560, paid as a single tax-free amount.
8.194. The factor is read against age next birthday, so someone retiring on superannuation at 60 uses the value for 61. The 8.287 listed against age 60 applies only to a person whose next birthday will be their sixtieth — for instance someone taking voluntary retirement at 59.
Central government civil pensioners: a maximum of 40% of basic pension. Defence pensioners: up to 50%. Bank employees under the 1995 Regulations: one third. Family pension cannot be commuted at all.
No — and this is the most important thing to understand before deciding. Dearness Relief continues on the full original basic pension, not on the reduced figure. Only the basic pension component falls, and only for fifteen years. As DR rises over that period, the proportional impact of commutation on your monthly credit keeps shrinking.
Exactly fifteen years from the date the commuted value was credited to you — not from the date of retirement, if the two differ. Restoration is automatic; your bank does it without any application. Where the commutation date is not on the PPO, the bank obtains it from the PAO through CPAO. If the lump sum was paid in stages, restoration follows in the same stages.
No. For government employees the commuted value of pension is fully exempt under section 10(10A) of the Income Tax Act. Your reduced monthly pension continues to be taxable as salary income in the normal way. This exemption is a large part of what makes commutation attractive relative to borrowing the same amount.
Not if you apply within one year of retirement — a simple application in Form 1 suffices. Apply after a year and a medical examination becomes mandatory under Chapter IV of the Rules, the process takes considerably longer, and the standards applied are stricter. Applying late also costs you a year of interest on the lump sum.
No. There is no provision for a second option once the first commutation has become absolute. If you commute 20% at retirement, the remaining 20% of your entitlement lapses. Decide your final percentage before filing Form 1 — use the slider above to model 20%, 30% and 40% side by side.
Rule 10A protects you. If your pension is revised upward after you have commuted — following a pay commission revision or a correction — you are entitled to the difference on the additional commutable amount. The revised table applies to such additional commutations arising from retrospective pay and pension revisions.
No. Family pension is calculated on your last basic pay and is entirely unaffected by how much of your own pension you commuted. Family pension itself can never be commuted.
No recovery is made from your family. The commuted value is not treated as a loan to be repaid — the reduction simply ceases with your pension, and family pension begins at its own rate on the full last basic pay, unreduced by your commutation.