If you are about to retire, you may come across the term ‘commutation of pension. So, what is commuted pension meaning? I will share a simple definition.
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The commuted pension helps you decide your present needs and your future financial status. Since the commuted pension has a high impact on your daily life, I should mention how commuted value affects the pension.
Proper structural planning can help you understand the commutation of pension value.
To lead your life stress-free after retirement, you will need:
Monthly cash flow
A decent amount of savings to avoid uncertainties.
What is commutation of pension?
The lump sum amounts your receive against your pension for any financial purpose, is known as the commutation of pension. As a Central Government Employee, you can commute 40% of your pension. I will share with you an example so that you can understand pension commutation meaning.
Let’s say you need some money for surgery.
So, you have thought of receiving 20% of your monthly pension is Rs. 25,000 in the upcoming month. So, the amount would be calculated as:
20% of 25000*12*5 = Rs 3,00,000.
This is the meaning of commutation of pension.
You can commute your pension during the years of your retirement or after retiring any time.
This was all about commuted pension meaning in a nutshell. I hope you find this informative.
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What is commutation of pension?
Kapil
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2022-08-22T10:56:28+00:00 2022-08-22T10:56:29+00:00Comment
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