WP 3958-61 of 1983
Commutation of Pension Rules

Summary :

Common Cause challenged Central Civil Services (Commutation of Pension) Rules, 1981 to strike down certain provisions of the said Rules as they permitted the Union to recover more than what is paid to the pensioners upon commutation. Further, a direction requesting for an appropriate scheme, rationalizing the provisions relating to commutation.

As the life expectancy had increased, it was found that commutation portion out of the pension was ordinarily recovered within about 12 years & there remained no justification for fixing the period at 15 years anymore.

On the suggestion of the Court, the Union of India examined the matter and agreed to restore the commuted portion of the pension in regard to civilian employees at the age of 70 years or after 15 years, whichever is later, effective from April 1, 1986. This will apply to all civilian pensioners (whose retirement age on superannuation is 58 years) and the personnel of Armed Forces (whose retirement age varies in accordance with the rank in service, the age of 37-38 years or more).

It was held that when a pensioner would commute any part of his pension, up to the authorised limit, his pension will be reduced for the remaining part of his life by deducting the commuted portion from the monthly pension. In addition to this, the commuting pensioner will get a lump sum amount which ordinarily he would have received in course of a spread over period subject to his continuing to live. On the expiry of 15 years from the date of retirement, restoration of commuted value of pension would take place and it would be just and equitable that the benefit of commuted portion of the pension. No separate period need be fixed for the Armed Forces personnel and they should also be entitled to restoration of the commuted portion of the pension on the expiry of 15 years as is conceded in the case of civil pensioners. It was directed to give in effect this order within a period of three months.