Calculate Pension , DCRG, Commutation , Family Pension - Study Material for PO/RMS accountant Examination
Types of Pension Cases
(1)
Superannuation
(2) Family
Pension
(3) Voluntary Retirement
(VR )
Rules
(i)
The qualifying service
for evaluation of pension is reduced to 10 years w.e.f. 02 09.2008. Earlier it
was 33 years.
(ii) Pension is
evaluated on the basis of the last 10 months average pay or last pay drawn
whichever is beneficial to retiring employee
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Terms related to the PENSION
Calculation
(i)
PENSION
(ii) DCRG (Death Cum
Retirement Gratuity)
(iii)
COMMUTATION
(iv) RESTORATION of
Pension
(v) FAMILY
PENSION
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How to calculate
Pension
The pension amount is calculated based on
the Basic Pay at the time of retirement, Age, Service years, etc. It is
calculated as 50% of average emoluments of last 10 months salary drawn. It is
calculated on Basic and Dearness Pay only.
SMP means Six
monthly period of qualifying service
Formula for Calculation of
Pension Amount =
50% of Avg. emoluments (last 10 months)
or 50 % emoluments drawn on the retirement
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DCRG
Formula for Calculation of DCRG
Last Salary Drawn X SMP
=
-----------------------------------------
4
OR
Last Salary Drawn X SMP
=
--------------------------------------- (in case of Death)
2
COMMUTATION
·
At the time of
retirement of the employee, a portion of pension can be withdrawn by the
employee.
·
A maximum of 40% of
pension amount can be withdrawn at the time of retirement. However, depending on
the amount withdrawn proportionate amount will be deducted from the Pension
amount till 15 years and employee will get reduced Pension till 15
years.
Formula for calculation of
Commutation
= Commutation Percent of Full
Pension x Age Factor x 12
Formula for calculation of Reduced
Pension
= (Full Pension – Commutation Percent of
Full Pension)
+ DA on Full
Pension
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If employee is dead before attaining his
qualifying Service of Retirement, The calculation of DCRG in such case is as
follows
DCRG = Total Pay X Multiplying
Factor
(Total pay = Basic pay + Grade Pay
)
Where Multiplying Factor varies as follows
Service Life MF
1 to 5 years
6
5 to 20 years
12
above 20 SMP / 2 (in case of death)
SMP / 4 (on retirement)
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Method for calculate family pension
Step 1 Calculate Total Pay ie Basic
Pay + DP ( A= Basic Pay + DP )
Step 2 Calculate 30 % of Total pay
( B= A*30/100)
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