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Commutation of pension calculator

Work out your commuted pension lump sum, the reduced pension for 15 years, and the dearness relief on the full pension. Uses the CCS commutation table.

Updated 3 July 2026 · Reviewed by Salary-Calculator.in

This calculator works out the commutation of a central government pension: the tax-free lump sum you receive for commuting up to 40 per cent of your pension, the reduced pension you draw for the next 15 years, the dearness relief that continues on the full pension, and the age at which the full pension is restored. It uses the commutation table in the CCS (Commutation of Pension) Rules, 1981. Enter your figures below; the result updates as you type. The method, the formula, and a worked example follow, so you can check the figure by hand.

Calculator

Your basic pension, before dearness relief.
Maximum 40 per cent. Higher entries are capped at 40.
The factor is chosen by age next birthday, so age 60 uses the factor for 61 (8.194).
Default 60 per cent from 1 January 2026. Editable.

Commutation breakdown

The lump sum is paid once and is tax-free under Section 10(10A). The reduced pension applies for 15 years, after which the full pension is restored.

What the calculator computes

The calculator takes four inputs, your monthly basic pension, the percentage you want to commute, your age at retirement, and the current dearness relief, and returns the full picture of a commutation.

The first output is the commutation lump sum, the one-time amount you receive for commuting part of your pension. The second is the reduced monthly basic pension, which is your pension less the commuted portion, drawn for the 15 years of the commutation. The third is the dearness relief on the full pension, which is important because dearness relief is computed on the full, un-commuted pension, so it does not fall when you commute. The fourth is the monthly pension during commutation, the reduced basic pension plus the dearness relief, which is what actually reaches your bank each month. Finally, it shows the age at which the full pension is restored, 15 years after retirement.

The formula

The lump sum is worked out from three things: the commuted portion of your monthly pension, an age-based commutation factor, and the number 12.

The formula is:

Lump sum = commuted monthly pension x commutation factor x 12

The commuted monthly pension is the percentage you commute, up to 40 per cent, of your basic pension. The commutation factor comes from the table in the CCS (Commutation of Pension) Rules, 1981, and it depends on your age next birthday. The number 12 converts the annual value the factor represents into the lump sum. The factor is higher for a younger person, because the reduction runs for more of their expected life, and lower for an older person.

The commutation factor and age next birthday

The single point that most often causes confusion is the age used. The factor is chosen by age next birthday as on the date the commutation takes effect, which is the date after retirement. So a person who retires at the superannuation age of 60 has an age next birthday of 61, and uses the factor for 61, which is 8.194, not the factor for 60. This is why 8.194 is the standard commutation factor quoted for a superannuation at 60. The calculator does this automatically: you enter your age at retirement, and it uses the factor for the next birthday.

The table is the one that has been in force since 1 January 2006, based on the LIC (94-96) Ultimate Table at 8 per cent interest, and it is unchanged under the 7th CPC. There have been proposals to revise the table and to reduce the restoration period from 15 years to 12, but none has been implemented, so the factors above are current.

A worked example

Take a pensioner retiring at 60 on a basic pension of Rs 50,000 a month, commuting the maximum 40 per cent, with dearness relief at 60 per cent.

The commuted portion is 40 per cent of Rs 50,000, which is Rs 20,000 a month. The commutation factor for age next birthday 61 is 8.194. The lump sum is Rs 20,000 times 8.194 times 12, which is Rs 19,66,560, about Rs 19.67 lakh, paid once and tax-free. The basic pension reduces to Rs 30,000 a month for 15 years. Dearness relief at 60 per cent is computed on the full Rs 50,000, which is Rs 30,000, so the pensioner draws Rs 30,000 plus Rs 30,000, that is Rs 60,000 a month, during the commutation, alongside the Rs 19.67 lakh received up front. After 15 years, at age 75, the full Rs 50,000 basic pension is restored, and the pension returns to Rs 50,000 plus dearness relief. This is the calculation the tool performs, and it is why most pensioners commute the maximum.

How to use the result

The lump sum is useful for a large expense or an investment at the point of retirement, and because it is restored after 15 years and dearness relief continues on the full pension, commuting the maximum is advantageous for most pensioners. The reduced pension is the cost, spread over 15 years, and the calculator lets you weigh the lump sum against that reduction for your own figures. For the rules behind the calculation, see the commutation of pension article, and for the dearness relief that continues on the full pension, the dearness relief article.

The calculator is a guide based on the standard commutation table and rules; your actual commutation is fixed by the sanctioning authority on your pension papers. For the wider retirement framework, see the central government pension article, and to work out a serving employee’s pay, the 7th CPC salary calculator .

Frequently asked questions

How is the commutation lump sum calculated?
The lump sum is the commuted portion of the monthly pension multiplied by the commutation factor for your age next birthday and by 12. For a pension of Rs 50,000 commuted at 40 per cent at age 60, that is Rs 20,000 times 8.194 times 12, about Rs 19.67 lakh, paid once and tax-free.
What commutation factor does the calculator use?
It uses the commutation table in the CCS (Commutation of Pension) Rules, 1981, keyed on age next birthday. A person retiring at 60 has an age next birthday of 61, for which the factor is 8.194. The table is unchanged since 2008 and is the current one under the 7th CPC.
Does the reduced pension affect my dearness relief?
No. Dearness relief is computed on the full, un-commuted basic pension, so commuting does not reduce your dearness relief. The calculator shows the reduced basic pension plus dearness relief on the full pension, which is the actual amount you draw during the 15 years.
How much of my pension can I commute?
Up to 40 per cent of the basic pension. The calculator caps the input at 40 per cent. The remaining 60 per cent continues as your monthly pension, and the commuted 40 per cent is restored after 15 years.
Is the commuted lump sum taxable?
No. The commuted lump sum of a government employee is fully exempt from income tax under Section 10(10A) of the Income-tax Act. The monthly pension, reduced or restored, remains taxable as salary.

See also

References

  1. CCS (Commutation of Pension) Rules, 1981, and the commutation table effective 1 January 2006 (Department of Pension and Pensioners’ Welfare O.M. No. 38/37/08-P&PW(A) dated 2 September 2008), based on the LIC (94-96) Ultimate Table at 8 per cent interest.
  2. Income-tax Act, 1961, Section 10(10A), on the exemption of the commuted pension of a government employee.
  3. Department of Pension and Pensioners’ Welfare orders on the payment of dearness relief on the full un-commuted pension.

References

  1. CCS (Commutation of Pension) Rules, 1981, and the commutation table effective 1 January 2006 (DoPPW O.M. No. 38/37/08-P&PW(A) dated 2 September 2008).
  2. Income-tax Act, 1961, Section 10(10A), on the exemption of the commuted pension.