COMMUTATION OF PENSION

[Ashok Chander Sharma]

Dear friends

I was compulsorily  retired on 15.09.2003 while I was working as Chief Manager.  I had put in more than 33 years of service in the bank. Since it has now been decided to extend option for pension to compulsory retired bank officers / employees.  My date of birth is 27.20.1946.  The commutation factor is 6.30 for the age ofr 72 years. 

Whether it  is  advisable to opt for commutation of pension ?

I seek your advices in the matter.

Ashok Chander Sharma

[Mohandas Rao]

Dear Sri Ashok Chander Sharma,

For the age of 72 years, the bank may not sanction commutation. They may ask for a medical report, which should not contain any health problems. Even if it sanctions, please consider the pros and cons:

Advantages of Commutation: a) The commutated amount is tax-free. 2) The amount so received will be recovered in 180 monthly instalments. 3) The commutation will be restored after the completion of 15 years. However, the full DA will be allowed for the net pension. 3) If the pensioner expires, the pending amount will be recovered from the family pensioner. 

Now some calculations: a) For a regular retiree, his age on the next birthday will be 61. The commutation factor for 61 years is 9.81. Suppose Rs.1,000 is commuted [maximum amount one can commute is 1/3rd of the basic pension], he will get a sum of Rs.1,17,200 [1,000*9.81*12]. His repayment over 15 years [180 months] is 1,000*180= Rs.1,80,000. It is 153.58% of the amount received.

Now, suppose one commutes Rs.1,000 at the age of 72 years. The commutation factor is 6.30. He will get just Rs.75,600 [1,000*6.30*12]. But, the repayment will be the same, namely 1,000*180 - Rs.1,80,000.  It is 238.1% of the amount received.

Now, it is up to you to decide, whether to opt for commutation or not.

Regards,

K. MOHANDAS RAO 

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[bhaskara sarma]

If the pensioner expires, the commutation will not be recovered from the family pensioner.

At 72 years it is not advisable to go for commutation,that too if someone is Hale and healthy.The bulk amount received is spent or diverted whereas the deduction continues for a long time.For a pensioner net monthly pension is more important than the lump sum amount.If some one is not healthy, the commutation is not allowed.

P Bhaskara Sarma.

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[Govindarajan L.N.]

Dear sir. In case of premature death of pensioner, the recovery will not be made from family pension. The recovery amount is slightly more than commutation amount which includes interest at 4.5% and risk insurance to take care of unforeseen deaths. 

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[Om Prakash Prajapati]

Dear Shri Sharma,

In my opinion, your commutation shall be worked out on the basis of your age next birthday immediately after the retirement, which is 57 years on 27.10.2003 in your case and the factor shall be around 11.1. It shall be paid right now and be recovered in 180 installments from the date, it's paid or from 27-11-2009 with interest @9%   and be recovered from the same date from pension arrears as well as from monthly pension payable to you.

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[R Balaji]

Dear Sir

small change " If the pensioner expires, the pending amount will not be recovered from the family pensioner"

pl let me know whether I am correct or not

regards

R BALAJI

KI SOLUTIONS/CAPRI

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[K. MOHANDAS RAO]

Dear Friends,

I had written: "Advantages of Commutation: a) The commutated amount is tax-free. 2) The amount so received will be recovered in 180 monthly instalments. 3) The commutation will be restored after the completion of 15 years. However, the full DA will be allowed for the net pension. 3) If the pensioner expires, the pending amount will be recovered from the family pensioner". 

Please read it as: "Advantages of Commutation: a) The commutated amount is tax-free. 2) The amount so received will be recovered in 180 monthly instalments. 3) The commutation will be restored after the completion of 15 years. However, the full DA will be allowed for the net pension. 3) If the pensioner expires, the pending amount will not be recovered from the family pensioner".  

It was a typing error.

K. MOHANDAS RAO

[harinarayana sarma nandivada]

You said rightly Sarmaji.

N Harinarayana Sarma

[Metlapalli Sharma]

 SRI MOHANDAS SIR,

WILL IT NOT BE A BETTER OPTION TO  CLAIM THE INTEREST ON DIFFERENCE OF COMMUTATION AMOUNT RATHER THAN THE COMMUTATION AMOUNT ITSELF  SO THAT DEDUCTION OR RECOVERY WILL NO MORE ARISE. SPECIALLY IN THE PRESENT CONTEXT WHEN THE FIRST 180 MONTHS ARE ALREADY COMPLETED  AND DOUBT AS TO PAYMENT OF COMMUNITY FOR A SECOND TIME ARISES..  PLEASE THINK OVER SIR.

SARMA.

 

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[Metlapalli Sharma]

 SRI MOHANDAS SIR,

WILL IT NOT BE A BETTER OPTION TO  CLAIM THE INTEREST ON DIFFERENCE OF COMMUTATION AMOUNT RATHER THAN THE COMMUTATION AMOUNT ITSELF  SO THAT DEDUCTION OR RECOVERY WILL NO MORE ARISE. SPECIALLY IN THE PRESENT CONTEXT WHEN THE FIRST 180 MONTHS ARE ALREADY COMPLETED  AND DOUBT AS TO PAYMENT OF COMMUNITY FOR A SECOND TIME ARISES..  PLEASE THINK OVER SIR.

SARMA.

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[CBREA CHENNAI]

Sir,

Can you please tell us about 2nd Commutation to pensioners also?

Advantage / Disadvantage?

Regards

Vasudevan V

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[Mohandas Rao]

Dear Sri Metlapapalli Sharma,

As per the SC order, the difference of Commutation with 9% interest has to be allowed by the banks. Neither the banks nor the IBA cannot interpret the order as they like. Nor the pensioners can ask only the interest portion to be released. The commutation arrears [the difference portion of 1/3rd the two basic pensions - old and new] so paid now has to be recovered in 180 monthly instalments from the next month onwards. No lumpsum recovery out of the arrears so paid. There is no such Pension Regulation providing such a lump sum recovery. The pensioners are not responsible for the fact that the 180 months' period is already over. The delay is due to the banks not allowing the benefit at the appropriate time [the date of retirement]. We had approached the courts within the time limit. That is, there was no limitation bar. 

For example, OBP Rs.6,591. NBP Rs.7,948.  Difference Rs.1,357/3=452. 452*12.05*12 = Rs.65,359 commutation arrears (for an age of 54 years). The Commutation Arrears = Rs.65,359 + 9% simple interest from date of retirement. The interest itself is almost Rs.1,00,000 for 17 years period! Recovery from the next month just Rs.452 from the new basic pay of Rs.7,948 plus applicable DA on Rs.7,948. 

This is the contention of the e-SBM pensioners and we are approaching SC with a contempt petition, requesting this relief only.

K. MOHANDAS RAO

[bhaskara sarma]

Dear Sarma garu,

That is what is done by Canara Bank,as reported by some of our colleagues.

With regards,

P Bhaskara Sarma.

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[Metlapalli Sharma]

Sri Mohandas sir,

many thanks.

sarma.

[RAMAKRISHNAN R P]

Dear K .MOHANDAS RAO JI,
I totally agree with you sir. we should fight for our right. This IBA
players are having one goal in their mind .That is to give trouble to
the retirees/pensioners and they should suffer and die till their end.
I don't know why they are showing such an ugly face to us. Last
Bipartite Joint Note is an example. After all, they forget that they
are also going to be retired shortly from the post. Very annoying
situation we are facing.

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[Lakshmanan Sankaranarayanan]

When the commutation amount (arrears) is paid with 9% interest then the Banks are in order to recover the commutation amount in one lump sum. Effectively this means only paying the interest. Even the interest payment alone will benefit the eligible retirees. That is why Banks are reluctant to pay the commutation arrears with interest. Only organisational pressure to IBA alone will yield the desired result.

S.Lakshmanan

[bhaskara sarma]

At least that should be done immediately if not in time.But filing contempt petition may be the only alternative since 5 year weightage also is not given to Associate Bank retirees.

P Bhaskara Sarma.

On Fri, Jul 13, 2018, 09:43 Lakshmanan Sankaranarayanan <laksh...@gmail.com> wrote:

When the commutation amount (arrears) is paid with 9% interest then the Banks are in order to recover the commutation amount in one lump sum. Effectively this means only paying the interest. Even the interest payment alone will benefit the eligible retirees. That is why Banks are reluctant to pay the commutation arrears with interest. Only organisational pressure to IBA alone will yield the desired result.

S.Lakshmanan

On Wed, Jul 11, 2018 at 10:53 AM, Metlapalli Sharma <metlapa...@gmail.com> wrote:

 SRI MOHANDAS SIR,

WILL IT NOT BE A BETTER OPTION TO  CLAIM THE INTEREST ON DIFFERENCE OF COMMUTATION AMOUNT RATHER THAN THE COMMUTATION AMOUNT ITSELF  SO THAT DEDUCTION OR RECOVERY WILL NO MORE ARISE. SPECIALLY IN THE PRESENT CONTEXT WHEN THE FIRST 180 MONTHS ARE ALREADY COMPLETED  AND DOUBT AS TO PAYMENT OF COMMUNITY FOR A SECOND TIME ARISES..  PLEASE THINK OVER SIR.

SARMA.

 

On Tue, Jul 10, 2018 at 5:21 PM, K. MOHANDAS RAO <mohand...@gmail.com> wrote:

Dear Friends,

I had written: "Advantages of Commutation: a) The commutated amount is tax-free. 2) The amount so received will be recovered in 180 monthly instalments. 3) The commutation will be restored after the completion of 15 years. However, the full DA will be allowed for the net pension. 3) If the pensioner expires, the pending amount will be recovered from the family pensioner". 

Please read it as: "Advantages of Commutation: a) The commutated amount is tax-free. 2) The amount so received will be recovered in 180 monthly instalments. 3) The commutation will be restored after the completion of 15 years. However, the full DA will be allowed for the net pension. 3) If the pensioner expires, the pending amount will not be recovered from the family pensioner".  

It was a typing error.

K. MOHANDAS RAO

On Tuesday, July 10, 2018 at 3:48:06 PM UTC+5:30, Ashok Chander Sharma wrote:

Dear friends

I was compulsorily  retired on 15.09.2003 while I was working as Chief Manager.  I had put in more than 33 years of service in the bank. Since it has now been decided to extend option for pension to compulsory retired bank officers / employees.  My date of birth is 27.20.1946.  The commutation factor is 6.30 for the age ofr 72 years. 

Whether it  is  advisable to opt for commutation of pension ?

I seek your advices in the matter.

Ashok Chander Sharma

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[Asok Bhaumik]

Your view is correct. But as per AIBRF cir. dt. 6.7.18 IBA has left it for the banks to implement Honb'l SC judgement as per laid down provisions in regard to commutation of pension. Whereas IBA in its cir. to the banks mentioned cleverly only to make payment of Da àrrears (not pension arrears ) as per Honb'l SC judgement. So filing of contempt petition is the alternative way.

On Fri 13 Jul, 2018 09:43 Lakshmanan Sankaranarayanan, <laksh...@gmail.com> wrote:

When the commutation amount (arrears) is paid with 9% interest then the Banks are in order to recover the commutation amount in one lump sum. Effectively this means only paying the interest. Even the interest payment alone will benefit the eligible retirees. That is why Banks are reluctant to pay the commutation arrears with interest. Only organisational pressure to IBA alone will yield the desired result.

S.Lakshmanan

On Wed, Jul 11, 2018 at 10:53 AM, Metlapalli Sharma <metlapa...@gmail.com> wrote:

 SRI MOHANDAS SIR,

WILL IT NOT BE A BETTER OPTION TO  CLAIM THE INTEREST ON DIFFERENCE OF COMMUTATION AMOUNT RATHER THAN THE COMMUTATION AMOUNT ITSELF  SO THAT DEDUCTION OR RECOVERY WILL NO MORE ARISE. SPECIALLY IN THE PRESENT CONTEXT WHEN THE FIRST 180 MONTHS ARE ALREADY COMPLETED  AND DOUBT AS TO PAYMENT OF COMMUNITY FOR A SECOND TIME ARISES..  PLEASE THINK OVER SIR.

SARMA.

 

On Tue, Jul 10, 2018 at 5:21 PM, K. MOHANDAS RAO <mohand...@gmail.com> wrote:

Dear Friends,

I had written: "Advantages of Commutation: a) The commutated amount is tax-free. 2) The amount so received will be recovered in 180 monthly instalments. 3) The commutation will be restored after the completion of 15 years. However, the full DA will be allowed for the net pension. 3) If the pensioner expires, the pending amount will be recovered from the family pensioner". 

Please read it as: "Advantages of Commutation: a) The commutated amount is tax-free. 2) The amount so received will be recovered in 180 monthly instalments. 3) The commutation will be restored after the completion of 15 years. However, the full DA will be allowed for the net pension. 3) If the pensioner expires, the pending amount will not be recovered from the family pensioner".  

It was a typing error.

K. MOHANDAS RAO

On Tuesday, July 10, 2018 at 3:48:06 PM UTC+5:30, Ashok Chander Sharma wrote:

Dear friends

I was compulsorily  retired on 15.09.2003 while I was working as Chief Manager.  I had put in more than 33 years of service in the bank. Since it has now been decided to extend option for pension to compulsory retired bank officers / employees.  My date of birth is 27.20.1946.  The commutation factor is 6.30 for the age ofr 72 years. 

Whether it  is  advisable to opt for commutation of pension ?

I seek your advices in the matter.

Ashok Chander Sharma

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[harinarayana sarma nandivada]

Sir,

The analysis is based on facts and is  thus well founded. 

N.Harinarayana Sarma

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