Every retired person comes across the CVP. Nevertheless, it is better to know what is commutation of pension beforehand to avoid any confusion. I will share with you what is CVP in pension in brief just to clear your doubt.
For any legal consultation contact expert lawyers at NoBroker legal services!It’s true that the commuted value of the pension is a tricky topic to deal with. Commuted pension is a choice between present needs and future financial status. Before demanding about commuted pension it's better to know how commuted value affects the pension.
Structural financial planning can help you understand the commuted value of the pension.
To have a hassle-free post-retirement you need:
Regular Cash Flow
Lumpsum Amount to avoid uncertainties.
Now, I will get back to telling you the definition of what is commuted value of the pension.
What is the commuted value of my pension?
While working you and your employer contribute to an annuity fund also known as Employee Provident Fund (EPF). This fund helps you get a pension after you retire. You can get this amount in two options:
a) As a monthly pension
b) Lump-sum amount paid in advance
The amount you receive in advance as a lump sum against your pension is known as commuted pension. So, if you want to go on a vacation at the age of 60 you will need a decent amount of money.
You have thought to receive 20% of your monthly pension of Rs. 25,000 in advance in the upcoming five years’ worth. So, the amount you will receive will be calculated as:
20% of 25000*12*5 = Rs 3,00,000.
This is the commuted pension.
You can commute pension more than once and you can enjoy this benefit after your retirement or during the retirement years.
I hope you know what is commutation of pension now.
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What is CVP in pension?
Amrita
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2022-08-11T10:36:01+00:00 2022-08-11T10:36:03+00:00Comment
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