KNOW YOUR RETIREMENT BENEFITS

 

Upon retirement from Government service, the Government offers various retirement benefits to its employees as a measure of social security for their old age. The quantum of these benefits is dependant upon two factors.

Ø      Emoluments drawn during the last 10 months of service; and

Ø      The length of ‘Qualifying service’ put in by a government servant.

It may be noted here that, the term ‘Emoluments’ has a different connotation for the calculation of pension and gratuity. For the calculation of pension, ‘Emoluments’ refers to Basic Pay+ Dearness Pay+ Stagnation Increment+ Non practicing allowance. However, for the purpose of the calculation of gratuity the term ‘Emoluments’ includes Dearness allowance as on the date of the retirement of a government servant.

The phrase ‘Qualifying service’ refers to the total duration of service put in by a government servant after reducing any period of non qualifying service such as periods of dies non, suspension specified as non qualifying service or any other period of absence not regularized as leave.

 

The amounts payable to a government servant upon retirement from service can be classified into 2 categories.

Ø      Retirement benefits.

Ø      Other dues.

The first category includes the following:

  1. Pension
  2. Commutation value of pension.
  3. Gratuity

 

Other dues which become payable upon retirement are:

  1. Insurance
  2. Leave Encashment
  3. GPF balance.

 

For the timely payment of retirement and other benefits the timely lodging of a claim with the Head of office is a must. Government servants due to retire must submit completed claim forms to their Heads of offices atleast 6 months before their retirement to ensure that all benefits are paid to them timely. The Heads of office process the pension papers as per the rules and forward the same to CCA offices for effecting payment to the retiring official.

Also to avoid any unnecessary payment related complication in the event of the death of a government servant it is essential that all government servants submit a copy of completed nomination forms for GPF, Gratuity and Insurance to their Heads of offices for attaching in their service books. Further, government servants should also verify their service books once annually and see whether all entries pertaining to service verification, insurance and pension contribution, leave etc. have been properly recorded in them. Any discrepancy in these entries should be brought to the knowledge of the Head of office at the earliest.

 

Calculation of Superannuation pension.

 

The formula for the calculation of superannuation pension is as given below:

50% of the last 10 month’s average emoluments x Qualifying service

                                                                                                           33

For example:

Average emoluments for the last 10 months = Rs.12000.00

Dearness Allowance rate on the date of retirement = 30%

Qualifying service = 28 years

Age on retirement  = 60 years

Commutation desires = 40%

 

In the above case pension will be equal to 1/2 x 12000 x 28/33= Rs. 5090.90 or Rs. 5091.00

      

The minimum amount of pension payable is Rs.1913 and the maximum amount of qualifying service entitled for pension is 33 years.

 

Calculation of Retirement gratuity.

 

Retirement gratuity is admissible to all employees after completion of 5 years of qualifying service. The quantum of gratuity payable is also derived from the emoluments (but here DA on the date of retirement is also included) @ ¼ of emoluments for each completed 6 monthly period of qualifying service subject to a maximum of 16 ½ times the emoluments or Rs. 3.5.lacs which ever is less.

Therefore in the above example the amount of gratuity payable would be:

 

15600 (Pay + DA+DP) x ¼ x56 (half yearly periods) = Rs.218400.00.

 

The maximum amount of gratuity admissible is Rs. 3.5 lacs. Gratuity is not payable to retirees against whom disciplinary / vigilance proceedings are pending at the time of retirement, till the conclusion of such proceedings.

 

Calculation of Commuted Value of pension.

 

As per the CCS (Pension) Rules, the government also gives an opportunity to its employees to commute a part of their pension in return for a lumpsum payment. The maximum percentage of pension which can be commuted under these rules is 40%. Upon the receipt of the lumpsum commuted value of pension, the pensioner draws reduced pension to the extent of the amount commuted, for 15 years. Thereafter, his pension is restored to full. Commuted value of pension is not payable to retirees against whom disciplinary / vigilance proceedings are pending at the time of retirement, till the conclusion of such proceedings.

 

In the above example the amount of pension admissible for commutation will be calculated in the following manner:

40  x  5091 = Rs. 2036.4 or Rs. 2036.00

100

The amount of lumpsum payable in lieu of the commuted amount is determined by means of a Commutation Table containing the commutation factors. The formula for working out the lumpsum payable is as follows.

 

Amount offered for Commutation x 12 x Commutation factor.

Therefore in the above case the amount will be equal to 2036x12x9.81 = Rs.239677.92 or Rs.239678.00

The reduction in the amount of pension on commutation will become operative from the date of receipt of the commuted value by the pensioner, or at the end of three months after the issue of authority for payment, whichever is earlier. For the restoration of the commuted value of pension upon completion of 15 years, the pensioner should apply to the pension disbursing authority i.e., Post office / Bank in the prescribed proforma.

 

Encashment of Earned leave.

 

The encashment of earned leave at credit at the time of retirement in respect of optees of BSNL, is paid by the SSA of BSNL where the employee had last worked. The amount of leave encashment payable is worked out in the following manner.

 

Emoluments (Pay +DA+DP) x No. of days of EL credit subject to max. 300 days

                          30

 

Therefore in the above case the leave encashment payable would be;

 15600 x 300 = Rs. 156000.00 (For 300 days of earned leave.)

      30

 

General Provident Fund.

 

The GPF balance at the credit of the employee becomes due for payment at the time of his retirement. GPF subscription is to be compulsorily discontinued during the last 3 months of service on superannuation. The employee should fill up the form for final payment and submit in his office. After processing of the same the form shall be forwarded to the concerned CCA office, which shall make arrangement for the payment of the principal and interest in the GPF account of the subscriber.

- Deepak Ashish Kaul.

 

(The author, is working as Jt. CCA (Pension) in the office of CCA, Maharashtra Circle, Mumbai. The article is only informative and general, for more details please refer the CCS (Pension) Rules.)