Reinstatement of 1/3rd commutation amount received after 15 years ...why cant they make it after 5 years...

RAGHAVAN

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Jun 25, 2011, 4:39:29 AM6/25/11

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As per the present commutation rules the one third basic commuted and paid to us is reinstated only after 15 years. But the amount of Commutation received is almost equal to 100 times the monthly commuted pension

If a pension commutes Rs 4000 being one third of his Basic pension ,He gets almost Rs4,80,000 as the amount immediately. But his commuted amount is reinstated only after 15 years, Can they not reinstate the commuted amount 8 years after commutation by which time he would have received the commuted amount lessened from his pension This is just a desire and suggestion so that pensioners are able to cope with the rising prices...

dilbagh

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Jun 28, 2011, 7:26:45 AM6/28/11

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Bank pension rules are mostly based on central govt pension
rules.
In central govt, commutation pension is reinstated after 12 years as
per
new rule of 6th pay commission. But in banking service
reinstatement is made after 15 years.

So there are good grounds for making a demand that commutation
portion of pension should be reinstated after 12 years as per
central govt pension rules.

Atleast this point should be risen in next pay settlement by
retirees and bank unions.

Dilbagh singh
ex manager
Syndicate bank

Mukesh Mehrotra

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Jun 28, 2011, 9:51:01 AM6/28/11

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In fact disparities of pension rule for Govt. employees viz-a-viz to bank employees should be taken up by various pensioners associations as the regular employees associations are felt unconcerned about the pensioners .

Big dispairity as stated by my friend about reinstatenment of commutaion and another big dispairity about fixtion of Pension as 50% of the Last pay drawn .should be taken up by the pensioners association.

Thanks

Mukesh Mehrotra

099821 49626

JAIPUR

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MOHANDAS RAO

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Jun 28, 2011, 10:12:17 AM6/28/11

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Dear Friends,

Let us see what is commutation and how it is paid. Commutation is an amount we would like to take in advance at the time of retirement. It is just like a loan taken for interest. The amount we are eligible to commute for the time being is 1/3rd of your basic pension. Demands are there for raising the limit to 40% etc. The amount so commuted will be paid to you in a lumpsum. This amount is tax-free (The interest/income earn by investing the commutation amount in deposits/shares/real estate etc is not tax-free).

This amount depends upon your age at the time of obtaining commutation. For example, if your age as on the date of commutation is 54, the corresponding 'commutation factor for that age is 12.05. Commutation factor multiplied by 12 is Rs.144.60 in this case. That is to say you will get Rs.144.60 for every rupee you have commuted. If, for example you commute Rs.2,196/- being 1/3rd of your basic pension you will get Rs.3,17,541/- as commutation. This will be recovered in monthly instalments of Rs.2,196/- for 15 years. After completion of 15 years, your commutation amount will be restored. That is to say you will get 2,196/- extra from the next month onwards, as if you have repaid a loan in full. Now you have repaid Rs.2,196 x 12 x 15= Rs.3,95,280/-. The extra amount of Rs.77,739/- may be treated as interest paid for the loan taken. This is actually for the risk factor also. A pensioner, if dies before restoration of pension (15 years), the nominee of the Pension Payment Order (usually the spouse, or a minor child) need not repay the remaining amount, like a loan waiver.The nominee will get family pension without any further deduction for the commutation.

If your age is higher, you will get lower amount of commutation as the commutation factor is less for an higher age (For example, it is 10.13 for 60 years and 9.48 for 62 years).The second advantage of commutation is that you receive the amount today, when its purchasing power is high. You will repay the amount in instalments for 15 years, the value of the fixed instalment goes on depleting year by year due to inflation.This lumpsum amount may be invested or utilised for fulfilling family obligation such as daughter's marriage, higher education of children etc.

The disadvantage is, the higher the amount you commute, the lower will be your net pension. Hence the question of maintaining the monthly expenses will arise. Hence demanding for a higher percentage of the portion for commutation may not be advantageous to some people. Also, if commutation period is reduced from 15 years to say, 10 years, naturally the commutation factor they may reduce so that you get a lesser amount. If it is not so, then only it will be advantageous to pensioners, and let us demand for it. In any case, these proposals and will not affect the present pensioners.

We are more concerned about up dation of pension. Otherwise, a new retiree of a lower grade will begin to draw higher pension than an old retiree of a higher grade.

Please continue discssion and contribute your views.

K. MOHANDAS RAO, SBM SVRS.

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Parthasarathy Sridharan

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Jun 28, 2011, 12:22:03 PM6/28/11

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It is very pertinent observation. Actually we will be paying more during the 15 year span. In the example quoted the commuted amount is recovered in 120 months or 10 years. He will be paying 50% more. Hence
it is a subject matter for deliberation in this forum and to find a via media for representation,

With regards,

Sridharan

On Sat, Jun 25, 2011 at 2:09 PM, RAGHAVAN <vijayara...@gmail.com> wrote:

As per the present commutation rules the one third basic commuted and paid to us is reinstated only after 15 years. But the amount of Commutation received is almost equal to 100 times the monthly commuted pension
If a pension commutes Rs 4000 being one third of his Basic pension ,He gets almost Rs4,80,000 as the amount immediately. But his commuted amount is reinstated only after 15 years, Can they not reinstate the commuted amount 8 years after commutation by which time he would have received the commuted amount lessened from his pension This is just a desire and suggestion so that pensioners are able to cope with the rising prices...

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SBMPC Blore

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Jun 28, 2011, 1:47:44 PM6/28/11

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Dear friends,

Commutation amount is based on the Commutation Factor, which is based on age as on next birthday. Higher the age, lower would be the amount. Factor is 15.64 @ 41 Yrs, 12.95 @ 51 Yrs and 9.81 @ 61 Yrs. It is more for an younger person as he is expected to survive the period of 15 years and such an expectation comes down with increase in age.

The formula is 1/3 X Basic Pension X 12 X Commutation Factor.

Therefore, it is incorrect to calculate when Commutation portion recoverable exceeds the commutation amount. If you commute at younger age, such an amount recoverable in 15 years is less or equal to 50% of Commutation received and if you commute at older age, commutation amount recoverable is more than the commutation amount. Here, we are forgetting the interest/discounting factor.

I hope have explained in full.

Thanking you,

With regards,

Prasad C N

Vice President.

Ramachandra Shenoy

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Jun 28, 2011, 8:06:05 PM6/28/11

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You need to factor the inflation and interest costs into calculation. Present value of the money is always higher than the future amount. You can calculate the exact rate at which the future value is discounted to you! Again, you have the option not to accept the commutation in case you feel the discount rate applied is higher.

Thanks
KRS

perumal maruthu

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Jun 28, 2011, 9:42:23 PM6/28/11

to bankpe...@googlegroups.com, kaliappan, siva, mohandoss

Mr.Rao you have driven home the importance of commutation. The most salient feature of the Central Pension scheme is COMMUTATION and Family Pension.

As for your view on the disadvantage, though your view is seemingly looks correct, commuted amount vests a sudden finaancial power to the pensioner and if he invests wisely he may get very good returns. A few pensioners ,after their SVRS/Superannuation invested boldly a few lakhs in land/flats in Bangalore. In ten years time, the investment has converted them as crorepathies.

Even if the commuted amount is deposited in Re-investment plans of one's own Bank the yield will be very decent. Again to quote your example, in 15 years the commuted amount of Rs317541 will be Rs969950/ @10.5%( However if inflation is above 10% then real value of investment gets eroded).

Hence, I opine every pensioner must commute the maximum permissible portion.

As for restoration from 15 years to 12years and 40% commutation, it is a very reasonable demand and already given to central pensioners. Our demand for updation of pension should not only cover increased basic pension but also on other factors such as 40% ,restoration after 12years and quarterly DA relief.

M.Perumal

Chennai-95

sureshbhat M

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Jun 29, 2011, 12:21:01 AM6/29/11

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Sirs

ONE Calculation- Commutation is profitable only if the pensioner dies early after retirement and not later than 10 yrs.

BUT in another calculation- the commuted amount will A FUND IN HAND and become nearly 3 times by 15 years with present Bank interest- whereas commutation recovery will be 1 1/2 times the amount. It also an insurance/bonus if he dies before 10 years

WHICH ONE IS BETTER ? OPINIONS MAY DIFFER

With regards,

Suresh Bhat M

....................................................................................................................................................................................................................

On Tue, Jun 28, 2011 at 9:22 AM, Parthasarathy Sridharan <para...@gmail.com> wrote:

RANGARAJAN M R

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Jun 29, 2011, 1:38:27 AM6/29/11

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COMMUTATION IS A DIFFERENT CONCEPT AND NOT RECOVERY OF LOAN IN
INSTALMENTS. IN THIS LIKE INSURANCE THERE IS A LIFE RISK FACTOR SINCE
ALL PENSIONERS MAY NOT LIVE LONG. IT IS NOT EASY TO GET THE RULE
CHANGED. AFTER MUCH STRUGGLE WE GOT PENSION SCHEME SIMILAR TO CENTRAL
GOVT. WITH SO MANY ISSUES NOT RESOLVED SO FAR. I DON'T THINK NEW
BENEFITS WILL BE PASSED ON TO THE PENSISONERS IN THE NEAR FUTURE.THE
GOVT. EMPLOYEES GET UNLIMITED MONEY FROM CONSOLIDATED FUND OF INDIA
WHICH CAN BE DEBITED ETERNALLY AND MET OUT OF TAX PAYERS MONEY. ADDED
TO THIS THE BEAUROCRATS PASS ON LARGESSE WITH EVERY PAY COMMISSION.
THE POLITICAL PARTIES ARE UNDER THE MERCY OF BEAUROCRATS TO GET THEIR
OWN INTEREST PROTECTED. BUT OURS IS A COMMERCIAL PROPOSITION AND
THEREFORE VIEWED BY EVERYBODY FROM A DIFFERENT ANGLE.

THE TENDENCY OF BANKERS AS SEEN SO FAR BOTH WHILE IN SERVICE AND
ALSO AFTER RETIREMENT THEY ALWAYS LAY THEIR HANDS TO CURTAIL EXPENSES
ON EMPLOYEES AND PENSIONERS . ATLEAST SERVING EMPLOYEES COULD
AGITATE AND MAKE THEIR VOICE HEARD.

LET US THINK PRACTICALLY AND TRY TO APPROACH ON CORE ISSUES WHERE WE
CAN ORGANISE AND ALSO GET THE BACKING OF STRONG LEGAL AND
CONSTITUTIONAL SUPPORT WHICH CANNOT BE BRUSHED ASIDE BY BANKS SO
EASILY.

RANGARAJAN

bhaskara sarma

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Jun 29, 2011, 2:28:33 AM6/29/11

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This is a longstanding practice to restore commutation amount after 15
years and it can not be changed and it is not practicable.we have
tofirst fight for 100%neutralisation of da for th0se who retired
before 1/11/2002.---p bhaskara sarma

J SOMASEKARA

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Jun 29, 2011, 2:35:20 AM6/29/11

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I think Rangarajan is correct.

The four major demands pending and the order it should be taken up is.

1. 50% of pay as basic pension from date of retirement.

2.100% DA for all

3. Pension Updation.

4. Pension for all category of retirees.

We should concentrate first on these issues and discuss ways to achieve that.

Commutation, quarterly DA are all minor issues which can be taken up later.

On Wed, Jun 29, 2011 at 11:08 AM, RANGARAJAN M R <rangar...@gmail.com> wrote:

Srinivasan Rajagopalan

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Jun 29, 2011, 3:57:24 AM6/29/11

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Please add increased gratuity to the list so that all those retired from 1.1.2006 to 25.5.2011 get the benefit of difference of Rs. 6.5 Lacs.

S.Rajagopalan

Manager (Retired)

Punjab National Bank (HO), New Delhi

s.rajagopalan

Rama Rama

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Jun 29, 2011, 6:14:19 AM6/29/11

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Dear Sri Mohan Rao.

Thank you for the wonderful information on Commutation of Pension amount.

One point that can be added here is:

The commuted amount is reduced from the 'Basic Pension' and the same is restored after 15 years. However, the DA payable is calculated on the Full 'Basic Pension' (before reducing the commuted amount) and is paid to the retiree every month.

V Ramaprasad

On Tue, Jun 28, 2011 at 4:56 PM, dilbagh <dilra...@gmail.com> wrote:

Bajrang Lal Choudhary

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Jun 29, 2011, 9:38:40 AM6/29/11

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Respected Sir,

I did a calculation.

1- If I donot commut my pension and deposit an amount equal to my commutation value in a commulative Deposit account for 180 months, @11.5% interest I get Rs-1133506/-

2- If I commut my pension and deposit the amount in fixed deposit @11.5% interest I get Rs-1604938/- after 180 months.

Calculate the profit or loss at your end.

With Regards,

B L Choudhary
--- On Tue, 28/6/11, sureshbhat M <sures...@gmail.com> wrote: