How to Calculate Commutation of Pension?

Before telling you how to calculate commutation of pension, I will share with you what is the commutation of pension. Both employer and employee contribute to an annuity fund which helps a person after retirement. But the lump sum amount you receive after your retirement is known as commutation of pension. So, how to calculate commuted value of pension.

Although commutation of pension is a tricky process there is a formula to know the amount. Let us know the calculation of commutation of pension.

How to calculate commutation of pension?

Commutation value of pension is=  The Amount of pension to be commuted X 12 X purchase value for age next birthday.

I will share with you an example so that you can understand it better.

I hope you know how to calculate commutation of pension now.

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Pension commutation is a financial option available to pension holders that allows them to exchange a portion of their regular pension payments for a lump sum payment. In other words, it's the process of converting a part of your future pension income into an immediate, one-time payment. The pension commutation formula is commutation amount x  commutation factor x  12.

Is there any commutation of pension calculator?

If you want to calculate the commutation of pensions, you can take this as an example:

• Lump Sum = 40% of Pension x Commutation Factor

For instance, if a pension holder has a monthly pension of ₹20,000 and the commutation factor at their age is 9.155, the calculation would be:

• Lump Sum = 40% of ₹20,000 x 9.155 = ₹7,322

Therefore, the pension holder would receive a lump sum payment of ₹7,322, while their monthly pension would be recalculated based on the reduced amount after commutation. It's crucial to understand the implications before making a decision and to consult official resources or financial experts for accurate and up-to-date information.

I suggest you do the calculation using the online calculator available on the pension portal as a lot of data needs to be provided for it. Here is the link:

So calculate the commutation of pension easily now.

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