Recovery of unfairly commuted pension: Retired employees extended commutation recovery period of 15 years

By Manohar Rao Chilappagari

Hyderabad: Generally all employees commute 40% of their pension at the time of retirement and get a lump sum instead as per the rules currently in force. The commuted amount is recovered from the pension every month for a period of 15 years, i.e., 180 months from the incumbent.

The 15 year recovery depends on certain factors such as inflation, mortality rate, life expectancy and commutation factor. In the year 2008, the Government of India revised the long-standing commutation tables. In 2010, Telangana (then AP) approved these tables.

Earlier the commutation factor was 10.46 from February 2010 to January 2010 at 8.371 but the recovery period remained the same despite the reduction in commutation factor. Due to this revised commutation factor, people who retired before 2010 get more than people who retired after 2010.

And the period of recovery from his pension shall remain the same. That means 15 years for people who retired before 2010 and also 15 years for people who retired after 2010. Actually the commitment value of pension is recovered only in 128 months but it is being recovered in 180 months which is unfair and irrational.

As noted in many states, the recovery period is only between 12 to 13 years. It is 12 years in Kerala and 13 years in Madhya Pradesh and Gujarat. Especially in Kerala. 12-year recovery has been around for decades.

The 5th Central Pay Commission (CPC) recommended decades ago that the recovery period should be limited to 12 years.

Unfortunately this has not been considered by the Government of India till now. Recently, the Second Judicial Commission headed by a Supreme Court judge and members also opined that the recovery period is 12 years, which is fair and reasonable.

Due to the governments’ inaction, some retired government employees knocked the doors of the court, in which the Chandigarh High Court passed an interim order staying the recovery of commuted value of pension.

Last week, the Haryana government directed the Accountant General and Treasury officials not to recover the commuted value of pension for those who have completed 10 years of recovery.