New Delhi – In what could be a significant relief for lakhs of central government employees and pensioners, the Modi government may consider reducing the pension commutation restoration period from 15 years to 12 years in the upcoming 8th Pay Commission. The long-standing demand from employee unions could finally see the light of day, bringing substantial economic benefits to retired individuals.
Demand for Pension Commutation Reform
The National Council (JCM), which represents central government employees, has formally urged the government to include pension commutation reforms in the recommendations of the 8th Pay Commission. The key demand is to reduce the time it takes to restore full pension post-retirement from 15 years to 12 years. If implemented, this could significantly increase monthly income for retirees after the 12-year mark.
What Is Commuted Pension?
Commuted pension refers to a lump sum payment received by government employees at the time of retirement. This amount is a portion of their total pension, offered upfront to provide immediate liquidity. However, to recover this amount, the government deducts a fixed portion from the monthly pension for 15 years.
Once this period ends, full pension is restored. Currently, many retirees have expressed dissatisfaction with this system, citing that the recovery period is too long, especially in an environment of low interest rates, which diminishes the value of the commuted amount over time.
Why 12 Years Makes Sense
Employee unions argue that with falling interest rates, recovering the commuted amount over 15 years is economically unfair. A reduction to 12 years would not only increase the lifetime pension payout but also ensure that retirees start receiving their full pension three years earlier, making a tangible difference in their post-retirement life.
If the government accepts this proposal in the 8th Pay Commission, employees retiring after the implementation would begin receiving full pension in 12 years instead of 15. There’s also growing hope that the change could be applied retrospectively, meaning existing pensioners may also benefit from the revision.
Government Yet to Take a Final Call
Although the central government hasn’t officially confirmed the change, discussions within the corridors of power are intensifying. The Cabinet Secretary has already received a letter from employee organizations pressing the issue, and a decision is likely to be considered during the deliberations of the 8th Pay Commission, expected to present recommendations in 2026.
If accepted, this move would be a landmark reform in pension policy, aligning it more closely with current financial realities and ensuring greater economic security for India’s retired workforce.
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- My name is Kuldeep Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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