Commutation factor table

The commutation factor table sets the age-wise multiplier used to convert commuted pension into a lump sum. At age 60 it is 8.287 and at age 61 it is 8.194.

Updated 22 July 2026 · Reviewed by Salary-Calculator.in

The commutation factor table is the table appended to the CCS (Commutation of Pension) Rules, 1981 that gives, for each age, the multiplier used to convert a commuted slice of monthly pension into a one-time lump sum. When a pensioner commutes part of their pension, the lump sum they receive is the commuted monthly pension multiplied by the factor for their age and by 12, so the factor is the single number that decides how much cash a given slice of pension is worth today. The factor is keyed on the age at the next birthday, and it falls as age rises, from 9.090 at age 40 to 4.611 at age 81.

Commutation is one of the first choices a retiring government employee makes, and the commutation factor is what makes the choice quantifiable. A pensioner deciding whether to commute the maximum 40 per cent of their pension, and how large a lump sum that produces, needs exactly one figure from this table: the factor for their age. Everything else in the commutation calculation, the 40 per cent limit, the reduced pension, the restoration after 15 years, the dearness relief that continues on the full pension, follows once the lump sum is fixed, and the lump sum is fixed by the factor. This article sets out the table itself, how to read it, the formula it feeds, what the factors are built from, and how they behave.

This article gives the full commutation factor table for the ages at which pensioners commute, explains that the table is read on the age at the next birthday rather than the current age, sets out the lump-sum formula and works through examples, explains why the factor falls with age and what mortality and interest assumptions produce it, and covers the 40 per cent commutation limit, the restoration after 15 years, the dearness relief on the full pension, the tax exemption, and how the table sits with the 8th Central Pay Commission . Every figure is taken from the commutation table in force under the CCS (Commutation of Pension) Rules, 1981.

What the commutation factor table is

The commutation factor table answers a single question: for a pensioner of a given age, how many years’ worth of the commuted pension will the government pay as a lump sum today? That number of years’ purchase is the commutation factor. It is not an interest rate or a percentage; it is a plain multiplier. A factor of 8.194 means the government pays 8.194 times the annual commuted pension, and because the annual figure is 12 times the monthly, the lump sum is the monthly commuted pension multiplied by 8.194 and by 12.

The table is part of the commutation of pension scheme, under which a pensioner may exchange up to 40 per cent of their monthly pension for the lump sum, keeping the remaining 60 per cent as a reduced pension that is later restored. The factor is the price the government pays for the commuted slice, and it is set administratively in the table rather than negotiated, so every pensioner of the same age next birthday gets the same factor. Because the factor is fixed by age, the whole of the commutation decision reduces to reading the right row of this table.

The commutation factor table

The table below gives the commutation factor for each age at the next birthday, from 40 to 81, the range over which central government pensioners commute. The lump sum is the commuted monthly pension multiplied by the factor and by 12.

Age next birthday	Commutation factor	Age next birthday	Commutation factor
40	9.090	61	8.194
41	9.075	62	8.093
42	9.059	63	7.982
43	9.040	64	7.862
44	9.019	65	7.731
45	8.996	66	7.591
46	8.971	67	7.431
47	8.943	68	7.262
48	8.913	69	7.083
49	8.881	70	6.897
50	8.846	71	6.703
51	8.808	72	6.502
52	8.768	73	6.296
53	8.724	74	6.085
54	8.678	75	5.872
55	8.627	76	5.657
56	8.572	77	5.443
57	8.512	78	5.229
58	8.446	79	5.018
59	8.371	80	4.812
60	8.287	81	4.611

The factor at age next birthday 61 is 8.194, and this is the value that most often applies, because a person who retires on superannuation at 60 and commutes straight away is treated at the next birthday of 61. The factors fall steadily and then more sharply with age, from just above 9 in the early forties to below 5 in the early eighties, and the fall is what makes early commutation worth more per rupee of pension given up.

The official table in the Rules formally begins at age next birthday 20, where the factor is 9.188, and runs to age next birthday 81, the oldest row, at 4.611. The rows below 40 are almost flat, moving only from 9.188 at 20 to 9.090 at 40, and are rarely used, because central government pensioners commute at retirement ages rather than in their twenties or thirties. The rows from 40 to 81 shown above cover every case that arises in practice, whether the pensioner retires on superannuation , on voluntary retirement , or on an invalid pension at a younger age.

How to read the table: age at the next birthday

The single most important point about using the table is that it is keyed on the age at the next birthday, not the current age. The relevant age is the age the pensioner will attain on their next birthday after the date on which the commutation becomes absolute, and the factor for that age is the one used. A pensioner who retires at 60 and commutes at once has a next birthday of 61, so the factor is 8.194, not the 8.287 shown against age 60. The 8.287 against age 60 applies where the age at the next birthday is 60, which arises when the commutation becomes absolute a little before the pensioner turns 59.

This age-next-birthday convention is a common source of confusion, because a pensioner naturally thinks of their current age. Reading 8.287 off the age-60 row for someone who has just turned 60 overstates the lump sum; the correct row for that pensioner is age 61, giving 8.194. The date the commutation becomes absolute is what fixes the age, and for a commutation applied for within a year of retirement that date is the date of retirement itself, so the age next birthday is taken as at retirement. The commutation of pension calculator applies the age-next-birthday rule automatically, so a pensioner who enters their age gets the right factor without having to make the adjustment by hand.

The lump-sum formula

The commuted value of the pension, the lump sum, is worked out from three things: the commuted portion of the monthly pension, the commutation factor for the age next birthday, and the number 12. The formula is:

Lump sum = commuted monthly pension × commutation factor × 12.

The 12 converts the monthly commuted pension into an annual figure, and the factor is the number of years’ purchase of that annual amount. So a pensioner commuting Rs. 20,000 a month of pension at age next birthday 61 receives Rs. 20,000 multiplied by 8.194 multiplied by 12, which is about Rs. 19.67 lakh, paid once. The commuted monthly pension here is the slice being given up, up to the 40 per cent maximum, not the whole pension. Because the factor and the 12 are fixed, the lump sum is directly proportional to the slice commuted, so commuting twice as much pension produces twice the lump sum at the same age.

Why the factor falls with age

The commutation factor is the number of years’ purchase, and it is built from a mortality table and an interest rate. The government, in paying the lump sum, is buying the commuted pension for the rest of the pensioner’s expected life, and it recovers the lump sum through the reduction it makes in the monthly pension. An older pensioner has a shorter expected remaining life over which that reduction will run, so the government pays a lower multiple; a younger pensioner has a longer expected life, so the multiple is higher. That is why the factor falls from just above 9 in the early forties to below 5 in the early eighties.

The steady fall matters for the timing of a commutation decision. Commuting earlier, at a higher factor, yields a larger lump sum for the same slice of pension given up, because the higher factor reflects the longer period over which the reduced pension will run. A pensioner commuting Rs. 20,000 a month at a factor of 8.194 receives about Rs. 19.67 lakh, whereas the same slice at a factor of 7.731, at age next birthday 65, yields about Rs. 18.55 lakh. The difference is the price of waiting, and it is one reason most pensioners who intend to commute do so at retirement rather than later.

What the factors are built from

The current commutation factor table, effective from 1 January 2006, is based on the LIC (1994-96) Ultimate mortality table at 8 per cent interest. It was notified by the Department of Pension and Pensioners’ Welfare through Office Memorandum No. 38/37/08-P&PW(A) dated 2 September 2008, following the 6th Central Pay Commission, and it replaced an earlier table built on a different mortality and interest assumption. The revised table generally gives higher factors than the old one, which is favourable to pensioners, because it reflects the longer life expectancy in the newer mortality data.

The two ingredients pull in opposite directions. A longer life expectancy in the mortality table raises the factor, because the reduced pension runs for more expected years; a higher assumed interest rate lowers it, because future amounts are discounted more heavily. The 8 per cent interest and the 1994-96 Ultimate mortality together produce the factors in the table, and because the table is a demographic and financial construct rather than a pay construct, it does not move when pay is revised. The same factors have applied since 2008 across the 7th Central Pay Commission period.

The 40 per cent commutation limit

The commutation factor decides the value of the slice commuted, but the size of the slice is capped: a pensioner may commute up to 40 per cent of their pension, no more. So the commuted monthly pension in the formula can be at most 40 per cent of the monthly pension, and the remaining 60 per cent continues as the reduced pension. The 40 per cent limit is a feature of the commutation of pension rules, not of the factor table, but the two work together: the limit sets how much pension can be turned into a lump sum, and the factor sets what that lump sum is.

Taking the two together, a pensioner on a monthly pension of Rs. 50,000 who commutes the full 40 per cent gives up Rs. 20,000 a month, and at age next birthday 61, factor 8.194, receives Rs. 20,000 multiplied by 8.194 multiplied by 12, about Rs. 19.67 lakh, keeping Rs. 30,000 a month as the reduced pension. A pensioner who commutes less than the maximum scales the lump sum down in proportion. The pension calculation article shows where commutation sits in the overall computation of what a pensioner draws.

The reduced pension, dearness relief, and restoration

Once the lump sum is paid, the pension is reduced by the commuted portion, and the reduction begins from the date the commuted value is paid. The pensioner then draws the reduced pension, 60 per cent of the original where the full 40 per cent has been commuted, for the period of the reduction. Importantly, dearness relief continues to be calculated on the full, un-commuted basic pension, not on the reduced pension, so the pensioner does not lose dearness relief on the commuted slice. This is a significant softening of the effect of commutation, and it is a rule worth knowing before deciding how much to commute.

The reduction is not permanent. The commuted portion is restored after 15 years from the date the reduction began, under the restoration of commuted pension rule, and from that point the pensioner draws the full pension again. The 15-year restoration is the reason the commutation factor, at around 8 for a retiree at 60, does not fully reflect the cost to the pensioner: the reduction runs for 15 years, but the factor of about 8 means the lump sum is recovered, with notional interest, over roughly that period, after which the pension is made whole. The interaction of the factor, the 15-year reduction, and the restoration is worked through in the restoration article.

Tax treatment

The lump sum received on commutation is tax-free for a central government pensioner. The commuted value of pension is exempt from income tax under Section 10(10A) of the Income-tax Act for an employee of the central or a state government, so the entire lump sum computed from the factor table is received without deduction of tax. This full exemption is one of the features that makes commutation attractive, because the pensioner converts a slice of taxable monthly pension into a tax-free lump sum.

The reduced monthly pension that the pensioner continues to draw remains taxable as before, as does the restored pension after 15 years, so only the one-time commuted value is exempt. The income tax for pensioners article sets out the taxation of a pension and of the commuted value in full; the point for the factor table is that the lump sum it produces is received tax-free, so the factor translates directly into cash in hand.

Medical examination and when the factor is applied

Whether a medical examination is required affects which date, and so which age, fixes the factor. Where a pensioner applies for commutation within one year of the date of retirement, no medical examination is required, and the commutation becomes absolute on the date of the application, so the factor is taken at the age next birthday as at that date. Where the pensioner applies after one year from retirement, a medical examination is required, and the commutation becomes absolute on the date the medical authority signs the certificate, so the factor is taken at the age next birthday as at that later date, which is usually a lower factor.

This is why commuting promptly at retirement is the common course: it avoids the medical examination and secures the higher factor of the earlier age. A pensioner who defers commutation not only faces the medical examination but also draws a lower factor from the table, because the age next birthday has advanced. The mechanics of the application, the forms, and the medical authority are set out in the commutation of pension article; the factor table is the schedule those mechanics feed into.

History and the 2008 revision

The commutation factor table has been revised as the underlying mortality data has been updated. The table in force before 2006 was built on an older mortality table and a lower assumed rate of interest, and it gave lower factors. The current table, effective from 1 January 2006 and notified in 2008, moved to the LIC (1994-96) Ultimate mortality table at 8 per cent interest, and it generally raised the factors, giving pensioners a larger lump sum for the same slice of pension. The change came through the pension side of the 6th Central Pay Commission implementation, not because pay was revised but because the mortality basis was updated.

The change in the interest assumption is what moved the factors most. The old table assumed 4.75 per cent interest, and the revised table assumes 8 per cent, a higher discount rate that lowers the years’ purchase; at age next birthday 61 the factor fell from 9.81 under the old table to 8.194 under the revised one. That the factors fell while the change was presented as favourable seems paradoxical, but the fall in the factor was accompanied by the far larger rise in the pension itself on the 6th Central Pay Commission, so the rupee lump sum a pensioner received still rose. The lower factor reflects the more realistic 8 per cent interest, and the newer mortality data offset part of the fall.

The distinction between a change in the table and a change in pay is important. A pay commission revises the pension, and so the rupee amount of the commuted slice and the lump sum, but it does not by itself change the factor. The factor changes only when the mortality table or the interest assumption behind it is revised, which is a separate exercise. Since 2008 the factors have been stable, so a pensioner commuting today uses the same table as a pensioner who commuted in 2010, applied to whatever pension the current rules produce.

The 40 per cent civil limit and the defence position

The commutation factor table is common to the pensioners who commute under it, but the maximum fraction that may be commuted is not the same for everyone. A central civil pensioner may commute up to 40 per cent of the pension, the limit set by the CCS (Commutation of Pension) Rules, 1981. Armed forces personnel are governed by their own commutation rules and may commute a higher fraction, up to 50 per cent of the pension. The factor table itself, the age-next-birthday multiplier, is applied in the same way in each case; what differs is the size of the slice the pensioner is allowed to turn into a lump sum, so a defence pensioner applies the same factor to a larger commutable fraction.

The distinction matters when comparing a civil and a defence pensioner of the same age and pension. Both read the factor of 8.194 at age next birthday 61, but the civil pensioner caps the commuted slice at 40 per cent and the defence pensioner at 50 per cent, so the defence lump sum is larger for the same pension. The 40 per cent figure used throughout this article is the central civil limit; a reader who is a defence pensioner should apply the defence limit to the same factor. Both draw dearness relief on the full pension and both see the commuted portion restored after 15 years.

Commutation across the pension schemes

Commutation, and so the factor table, belongs to the defined-benefit pension. A pensioner under the Old Pension Scheme commutes up to 40 per cent of the defined pension using the factor table, exactly as this article describes. A pensioner under the Unified Pension Scheme , which carries an assured payout on the defined-benefit pattern, has a commutation facility on the assured payout, again using the age-next-birthday factor. The mechanics are the same because in both a defined monthly pension exists to be commuted.

The National Pension System is different. There is no defined pension to commute; instead the subscriber withdraws a lump sum from the accumulated corpus at exit and buys an annuity with the balance, so the commutation factor table does not apply in the same way. A National Pension System subscriber deciding how much of the corpus to take as a lump sum is making a different decision from a defined-benefit pensioner reading a factor off this table. The reader should therefore confirm which scheme governs the pension before applying the factor table: it is the tool of the defined-benefit pension, under the Old Pension Scheme and the assured payout of the Unified Pension Scheme, not of the National Pension System corpus route.

The commutation factor table and the 8th Central Pay Commission

Because the commutation factor table is a mortality and interest table rather than a pay table, it does not automatically change when a pay commission revises pay. The 8th Central Pay Commission , constituted in November 2025, will revise the pension the factor is applied to, so the rupee lump sum a given pensioner receives will rise with any pension revision, but the factor itself will change only if the government separately revises the mortality table or the interest assumption behind the table. No change to the commutation factors can be stated as fact on account of the 8th Central Pay Commission.

Until any such revision, the factors in the table above continue to apply: 8.194 at age next birthday 61, and the rest of the schedule from 40 to 81. A pensioner planning a commutation should use the current factor for their age next birthday and the current pension, and treat any projected change to the factor table itself as speculation until the government notifies a revised table. What a pay revision will change is the pension, and with it the rupee value of the lump sum, not the multiplier.

Frequently Asked Questions (FAQs)

What is the commutation factor table?

The commutation factor table is the table appended to the CCS (Commutation of Pension) Rules, 1981 that gives, for each age, the multiplier used to convert a commuted slice of monthly pension into a one-time lump sum. The lump sum equals the commuted monthly pension multiplied by the factor for the pensioner’s age and by 12. The factor falls as age rises, because an older pensioner’s reduced pension will run for fewer expected years.

What is the commutation factor at age 60?

At age 60 the commutation factor is 8.287, and at age 61 it is 8.194. Because the table is keyed on the age at the next birthday, a pensioner who retires at the age of superannuation of 60 and commutes at once is treated at age next birthday 61, so the factor of 8.194 is the one that usually applies on superannuation. The 8.287 value at age 60 applies where the age next birthday is 60, for example on commuting a little before turning 59.

How is the lump sum calculated from the factor?

The commuted value of pension is the commuted portion of the monthly pension multiplied by the commutation factor for the pensioner’s age next birthday, multiplied by 12. For example, commuting Rs. 20,000 a month of pension at age next birthday 61, the factor is 8.194, so the lump sum is Rs. 20,000 multiplied by 8.194 multiplied by 12, which is about Rs. 19.67 lakh, paid once.

Why does the commutation factor fall with age?

The factor is the number of years’ purchase the government pays for the commuted pension, and it is built from a mortality table and an interest rate. An older pensioner has a shorter expected remaining life over which the reduced pension will run, so the government recovers the lump sum over a shorter period and pays a lower multiple. A younger pensioner has a longer expected life, so the factor is higher.

What is the commutation factor table based on?

The current table, effective from 1 January 2006, is based on the LIC (1994-96) Ultimate mortality table at 8 per cent interest, notified by the Department of Pension and Pensioners’ Welfare Office Memorandum No. 38/37/08-P&PW(A) dated 2 September 2008. It replaced an older table based on a different mortality and interest assumption, and it applies uniformly across the pension schemes that allow commutation.

Does the commutation factor table change with a pay commission?

Not directly. The table is a mortality and interest table, not a pay table, so it does not change when a pay commission revises pay. The last change was in 2008, when the mortality table was updated, and the same factors have applied through the 7th Central Pay Commission. A pay commission changes the pension the factor is applied to, not the factor itself, unless the mortality table is separately revised.

External references

References

CCS (Commutation of Pension) Rules, 1981, providing for commutation of up to 40 per cent of pension and the commuted value based on the commutation table appended to the Rules.
Department of Pension and Pensioners’ Welfare, Office Memorandum No. 38/37/08-P&PW(A) dated 2 September 2008, notifying the revised commutation table effective 1 January 2006, based on the LIC (1994-96) Ultimate mortality table at 8 per cent interest.
CCS (Commutation of Pension) Rules, 1981, on the restoration of the commuted portion of pension after 15 years from the date the reduction in pension became operative.
Department of Pension and Pensioners’ Welfare instructions that dearness relief is calculated on the full, un-commuted basic pension.
Income-tax Act, 1961, Section 10(10A), exemption of the commuted value of pension for central and state government employees.
Ministry of Finance, Department of Expenditure, Resolution F. No. 01-01/2025-E.III(A), dated 3 November 2025, constituting the 8th Central Pay Commission.