CCS (Commutation of Pension)
Rules, 1981
Last Amended: 06/06/2013 | Department of Pension & Pensioners' Welfare, Ministry of Personnel, Public Grievances & Pensions
Preliminary — Application & Definitions
The rules were made by the President under proviso to Article 309 and Clause (5) of Article 148 of the Constitution, after consultation with the Comptroller & Auditor General in relation to persons serving in the Indian Audit and Accounts Department.
Application
- ✅These rules apply to Government servants appointed on or before 31st December 2003 who are entitled to or have been authorised any class of pension referred to in Chapter V of CCS (Pension) Rules, 1972.
- 🚫These rules do NOT apply to NPS (National Pension System) employees appointed on or after 1st January 2004.
Key Definitions
| Term | Definition |
|---|---|
| Accounts Officer | Officer (whatever designation) who maintains accounts of a Ministry/Department/Office of Central Govt. or UT; includes Accountant General entrusted with keeping accounts. |
| Applicant | A Government servant, including a retired Government servant, who applies for commutation of a percentage of pension in the prescribed form. |
| Chief Administrative Medical Authority | Medical authority of the State or Union Territory as specified in the Annexure to these rules. |
| Retirement Gratuity | Gratuity payable under sub-rule (1) of Rule 50 of the Pension Rules. |
| Disbursing Authority | (i) Branch of a nationalised bank; or (ii) Treasury including sub-treasury; or (iii) Accounts Officer — from where the applicant is receiving pension. |
| Pension | Any class of pension including compassionate allowance referred to in Chapter V of Pension Rules. Does NOT include extra pension or any compensation amount for higher cost of living. |
| Provisional Pension | Pension referred to in Rule 64 or Rule 69 of the Pension Rules. |
| Table | The table appended to these rules used to calculate the commuted value of pension. |
General Conditions (Rules 4 to 10A)
Restriction on Commutation
A Government servant against whom departmental or judicial proceedings (referred to in Rule 9 of Pension Rules) have been instituted before the date of retirement, or a pensioner against whom such proceedings are instituted after retirement, shall NOT be eligible to commute a percentage of his provisional pension (Rule 69, Pension Rules) or pension — during the pendency of such proceedings.
Limit on Commutation of Pension
- 📊A Government servant is entitled to commute for a lump sum payment an amount not exceeding 40% of his pension.
- 📝In the application (Form 1, Form 1-A, or Form 2), the applicant shall indicate the fraction of pension he desires to commute — either the maximum of 40% or a lower limit as desired.
- 🔢If the percentage results in a fraction of a rupee, such fraction shall be ignored for the purpose of commutation.
When Does Commutation Become Absolute?
| Scenario | Date Commutation Becomes Absolute | Reduction in Pension Operative From |
|---|---|---|
| Applicant under Rule 13(1) — applies after retirement (without medical exam) | Date on which application in Form 1 is received by the Head of Office | (a) Treasury/A/O: Date of receipt of commuted value OR end of 3 months after A/O issues authority — whichever is earlier |
| Applicant under Rule 13(3) — applies before retirement on superannuation (Form 1-A) | Date following the date of retirement | From its inception. If payment delayed beyond first month after retirement (not due to pensioner's fault), A/O authorises difference of monthly pension for the intervening period. |
| Applicant requiring medical examination (Chapter IV) | Date on which the medical authority signs the medical report in Part III of Form 4 | (b) Nationalised bank: Date commuted value is credited to applicant's account |
| Commuted value paid in two or more stages (Rule 9 / Rule 10) | — | Reduction made from the respective dates of each payment |
The date on which commuted value was paid / credited to applicant's account shall be entered in both halves of the Pension Payment Order by the disbursing authority under intimation to the Accounts Officer.
Nominations
- 📄An applicant shall make a nomination in Form 5 along with the application (Form 1 or Form 2), conferring on one or more persons the right to receive the commuted value if the applicant dies without receiving the commuted value on or after the date commutation became absolute.
- 👨👩👧If there is no nomination, or if the nomination does not subsist → commuted value paid to the family in the manner under Rule 51(1)(b) of Pension Rules.
- ⚖️If commuted value cannot be paid per sub-rules (1) and (2) → paid to the applicant's heirs.
Calculation of Commuted Value
Commutation of Provisional Pension
- ✅A Govt. servant to whom provisional pension has been sanctioned under Rule 64 of Pension Rules (pending assessment of final pension) is eligible to commute a fraction of such provisional pension — subject to the 40% limit (Rule 5).
- 📋Provisions of Chapter III or Chapter IV (as the case may be) apply to commutation of provisional pension.
Special provisions for provisional pension applicants requiring medical exam (Chapter IV):
- ▪️If the fraction of provisional pension to be commuted does NOT exceed ₹6,000 p.m. but final pension is expected to exceed ₹6,000 → the application is deemed to be for commutation exceeding ₹6,000 p.m. (for the purpose of Rule 22 — Medical Board requirement).
- ▪️If applicant does not indicate expectation of final pension exceeding ₹6,000 → treated as applying for commutation up to ₹6,000 p.m.
- ▪️On final pension determination: if eligible to commute up to ₹6,000 → no fresh medical examination needed for the difference.
- ▪️If on final determination, eligible to commute amount exceeding ₹6,000 → must apply afresh in Form 2 for commutation of pension exceeding ₹100.
Retrospective Revision of Final Pension
- 📈If after commutation, pension is retrospectively enhanced as a result of Government's decision → the applicant shall be paid the difference between commuted value on enhanced pension and commuted value already authorised.
- 🚫No fresh application required for payment of the difference.
- ▪️If applicant commuted original pension not exceeding ₹6,000 (declared fit by Civil Surgeon / District Medical Officer) and due to retrospective enhancement becomes eligible to commute more than ₹6,000 p.m.:
- ▪️Difference between commuted value of ₹6,000 p.m. and commuted value of the percentage of original pension → allowed without further medical examination.
- ▪️Commutation of any amount beyond ₹6,000 p.m. → treated as fresh commutation, subject to Medical Board examination.
Restoration of Commuted Pension
Commuted Pension Restored After 15 Years
The commuted amount of pension shall be restored on completion of fifteen years from the date the reduction of pension on account of commutation becomes operative in accordance with Rule 6.
Where commutation was paid on more than one occasion (due to upward revision of pension) — the respective commuted amount shall be restored on completion of fifteen years from the respective date(s) of each such payment.
Commutation Without Medical Examination (Rules 11–16)
Scope of Chapter III
The provisions of Chapter III (Rules 11–16) shall apply to an applicant who is eligible to commute a percentage of his pension without medical examination.
Eligibility — Without Medical Examination
An applicant authorised any of the following pensions, who applies in Form 1 or Form 1-A within one year of retirement, is eligible to commute without medical examination:
- 1️⃣Superannuation pension — under Rule 35 of Pension Rules
- 2️⃣Retiring pension — under Rule 36 of Pension Rules
- 3️⃣Pension on absorption in/under a corporation/company/body under Rule 37 of Pension Rules — who elects to receive monthly pension and retirement gratuity
- 4️⃣Compensation pension on abolition of permanent post — under Rule 39 of Pension Rules
- 5️⃣Pension on finalization of departmental or judicial proceedings (Rule 9 of Pension Rules) and issue of final orders
Pension under items (1), (2), and (4) includes provisional pension sanctioned under Rule 64 of Pension Rules.
Application for Commutation — Form 1 & Form 1-A
- Apply after the date following date of retirement
- Form 1 must be delivered to Head of Office not later than one year from date of retirement
- If Form 1 reaches HoO after one year → NOT eligible without medical exam; must apply fresh in Form 2
- Only for superannuation pension
- Submitted to Head of Office not later than 3 months before superannuation
- Applications with less than 3 months to superannuation: not entertained
- Government has NO liability for commuted value if Govt. servant dies before retirement or forfeits claim to pension before retirement
Special period-reckoning provisions (Rule 13 — Provisos):
- ▪️For absorption pension (Rule 12(iii)) where retirement order was issued from a retrospective date → one-year period reckoned from the date of issue of retirement orders.
- ▪️For pension after finalization of departmental/judicial proceedings (Rule 12(v)) → one-year period reckoned from date of issue of orders consequent on finalization.
Action by Head of Office on Form 1 / Form 1-A
Initial the Form & Note Receipt Date
On receipt of Form 1 (Rule 13(1)) or Form 1-A (Rule 13(3)), HoO initials the form and notes the date of receipt.
Acknowledge Immediately
Acknowledge receipt in Part II of Form 1 or Form 1-A and dispatch to the applicant immediately.
Complete Part III & Forward to A/O
Take immediate action to complete Part III of Form 1 or Form 1-A and forward to the Accounts Officer, retaining one copy for records.
If Form 1 Received After One Year
HoO informs the applicant: (a) not eligible without medical exam; (b) if desired, apply afresh in Form 2 for medical examination under Chapter IV.
Authorization of Commuted Value by the Accounts Officer
For Form 1 applications (Rule 15(1)&(2)):
- ✅A/O verifies: (a) information in Part III of Form 1 is correct; (b) applicant is eligible to commute without medical exam; (c) commuted value has been determined correctly by HoO.
- 💳After verification, A/O: (a) issues authority for payment to disbursing authority; (b) draws attention of disbursing authority to Rule 6 proviso (regarding date of reduction); (c) endorses copy of authority to applicant with instruction to collect commuted value from disbursing authority.
For Form 1-A applications (Rule 15(3)) — Commuted value paid along with retirement:
- 📅A/O ascertains if superannuation pension amount has been calculated; if not, finalises pension so that PPO is issued before one month of retirement date.
- 🏦A/O authorises Head of Office to draw the commuted value by submitting a bill; cheque/draft is superscribed "Not payable before [date following date of retirement]".
- 📄A/O indicates in both halves of PPO: (1) gross pension; (2) amount commuted; (3) fact that commuted value was authorised separately through DDO.
- ✂️Monthly pension correspondingly reduced from its inception.
- 📒Note of payment of commuted value made in the Service Book.
- 💡If payment of commuted value not made within the first month after retirement and delay is NOT attributable to pensioner → A/O issues authority to HoO for payment of difference of monthly pension for the intervening period.
- 📩A/O intimates the applicant the date on which the PPO was dispatched to the disbursing authority; also requests HoO to intimate the date cheque/draft was handed over to applicant.
Authorization of Commuted Value of Provisional Pension
HoO Forwards Form 1 + Pension Papers to A/O
HoO takes action per Rule 14(1) and forwards Form 1 to A/O along with duly completed pension papers (if not already forwarded). Requests A/O to verify correctness of provisional pension and the commuted value determined in Part III of Form 1.
A/O Verifies & Issues Authority to HoO
A/O verifies provisional pension amount and commuted value. Issues authority to HoO to draw and disburse commuted value to applicant. Directs HoO to make reduction in provisional pension per Rule 6 proviso. Endorses copy of authority to applicant.
HoO Draws & Disburses
HoO draws commuted value and disburses to applicant under intimation to A/O.
On Final Assessment of Pension
A/O issues authority to disbursing authority for the difference between the commuted value of final pension and commuted value already paid. Makes entry in PPO (issued on cessation of provisional pension payment by HoO) noting: (i) fact of payment of commuted value of provisional pension by HoO; (ii) date from which residuary pension shall commence.
Commutation With Medical Examination (Rules 17–28)
Scope of Chapter IV
The provisions of Chapter IV (Rules 17–28) shall apply to an applicant who is eligible to commute a percentage of his pension after medical examination.
Eligibility — With Medical Examination
The following applicants are eligible to commute a percentage of pension — subject to the 40% limit — after being declared fit by the appropriate medical authority:
- 1️⃣Retires on invalid pension under Rule 38 of Pension Rules
- 2️⃣Is compulsorily retired as a penalty and granted pension under Rule 40 of Pension Rules
- 3️⃣Is in receipt of compassionate allowance under Rule 41 of Pension Rules
- 4️⃣Has retired on any pension listed in Rule 12 but his Form 1 application was NOT received by HoO within one year of retirement
Application — Form 2
The applicant referred to in Rule 18 shall apply to the Head of Office in Form 2 for commutation of a percentage of pension — including provisional pension sanctioned under Rule 64 of Pension Rules.
Action by Head of Office on Form 2
HoO Acknowledges & Forwards to A/O
Acknowledges receipt in Part II of Form 2 and despatches to applicant immediately. Forwards Form 2 in original to A/O in Part III, requesting A/O to complete Part IV and return as early as possible.
A/O Completes Part IV & Returns to HoO
A/O completes Part IV of Form 2 and transmits to HoO as early as possible.
HoO Addresses Chief Administrative Medical Authority
HoO addresses CAMA in Form 3 and forwards: (i) Form 2 with Part IV completed (original); (ii) two copies of applicant's photograph (one attested); (iii) Form 4 with a spare copy of Part III; (iv) report/statement of applicant's medical case (if applicable — e.g., invalid pension, previously commuted, declined earlier, refused on medical grounds).
Copies Endorsed
A copy of the Form 3 letter addressed to CAMA is endorsed to both the applicant and the Accounts Officer.
Action by Chief Administrative Medical Authority (CAMA)
- 🏥CAMA arranges medical examination at the nearest available station indicated by the applicant in Form 2, as far as possible.
- 📨Transmits documents to the medical authority with direction to examine the applicant per Rule 25.
- 🗓️Informs or directs the medical authority to inform the applicant of the place, date, and time of examination.
- 📅In fixing the date, it shall be ensured (as far as possible) that medical examination is held before the applicant's next birthday.
Medical Authority — Board vs. Medical Officer
- Applicant seeks commutation of invalid pension
- Pension to be commuted (together with amounts previously commuted) exceeds ₹6,000 per mensem
- Applicant was refused commutation on medical grounds OR declined commutation on basis of addition of years, and now applies for second medical examination (Rules 26 & 27)
- All other cases not covered by the Medical Board requirement
- Pension to be commuted (together with previous commutations) does not exceed ₹6,000 per mensem
Fee for Medical Examination
The applicant shall be required to pay for medical examination such fee as may be specified by the Central Government. The fee is borne by the applicant, not the Government.
Failure to Appear Before Medical Authority
- 🚫If the applicant fails to appear for medical examination on the communicated date and time (including any change) without reasonable ground → the medical authority reports the fact to HoO and returns all documents.
- ❌On return of documents to HoO → the application for commutation is treated as having been withdrawn.
Procedure for Medical Examination
Obtain Statement in Part I of Form 4
The medical authority obtains a statement from the applicant in Part I of Form 4, duly signed in its presence.
Conduct Medical Examination
Subjects applicant to medical examination and enters the result in Part II of Form 4. Attests the unattested copy of applicant's photograph. In special cases (invalid pension, previously commuted, refused on medical grounds, declined on basis of age addition) → must consider the medical case statement before completing Part III.
Complete Certificate in Part III of Form 4
Commutation becomes absolute on the date the medical authority signs the medical report in Part III of Form 4 (Rule 6(1)(ii)).
Forward to Accounts Officer (Without Delay)
Medical authority forwards to A/O: (a) Form 2 in original; (b) attested copy of applicant's photograph; (c) Form 4 in original. Also sends to HoO a certified copy of Form 4; and to applicant a certified copy of Part III of Form 4.
Second Medical Examination (Not an Appeal)
This applies to an applicant who was refused commutation on medical grounds or who declined commutation based on age addition (Rule 22(1)(c)) and now desires re-examination:
- 📅Second examination can take place only after expiry of not less than one year from date of first examination.
- 💸Re-examination is by a Medical Board at the applicant's own expense.
- 📝Applicant addresses a letter to HoO requesting re-examination, indicating: (i) first medical authority and date; (ii) place of examination; (iii) opinion of the medical authority; (iv) date of birth and retirement; (v) designation at retirement; (vi) pension authorised; (vii) % of pension originally applied for commutation.
- 🔄HoO addresses CAMA for re-examination and forwards applicant's letter and certified copy of Form 4 from first examination.
- 📊If Medical Board finds in favour of the applicant → HoO determines commuted value with reference to the Table applicable on the date Medical Board recorded its opinion, and forwards to A/O for authorization.
Appeal Against Findings of Medical Authority
An applicant (Rule 22(1)(c)) who believes the medical authority made an error of judgement in refusing commutation or adding years to actual age may appeal before the expiry of one year.
- ⏰Must prefer appeal within one month of receipt of certified copy of Part III of Form 4 from the medical authority.
- 📝Address a letter to HoO requesting review by another medical authority at applicant's own expense, with same particulars as in Rule 26(2).
How the appeal re-examination is constituted:
| First Examiner | Appeal Re-examiner |
|---|---|
| Medical Officer (Civil Surgeon / District Medical Officer) | Medical Board |
| Medical Board | Second Medical Board — members must be different from those of the first Board |
- 📋HoO, within one month of receipt of appeal letter, steps to arrange re-examination and addresses CAMA where applicant was examined previously.
- ⚖️Findings of the Medical Board in appeal are binding on the applicant.
- 📅If the appeal Medical Board sets aside or modifies the first opinion → finding deemed to have come into force on the date the first medical authority recorded its opinion; claim settled accordingly.
- 🚫Rule 27 does NOT apply where the first medical authority directed addition of years to applicant's actual age AND the applicant already received commuted value with reference to the enhanced age.
Withdrawal of Application
| Situation | Withdrawal Option | Time Limit |
|---|---|---|
| Before appearing for medical examination | May withdraw by giving written notice to HoO — NOT after appearing before medical authority | Any time before examination |
| Medical authority directs addition of years to actual age | (a) Withdraw application by written notice to HoO (copy to A/O); OR (b) Request HoO to reduce the amount of pension applied for commutation to an amount to be indicated | 14 days from receipt of certified copy of Part III of Form 4 |
| No withdrawal request within 14 days (age addition case) | Presumed to have accepted medical authority's findings → A/O proceeds to authorise payment of commuted value | — |
| A/O informs of less favourable modified Table (Rule 29) | Applicant may withdraw by written notice to A/O (copy endorsed to HoO) | 14 days from receipt of intimation of modification |
Miscellaneous Provisions (Rules 29–34)
Modification in the Value Specified in the Commutation Table
- 📊If the Table value is modified before commutation becomes absolute (i.e., before medical authority signs Part III of Form 4 — Rule 6(1)(ii)) → payment shall be made as per the modified (revised) Table.
- ⚠️If the modified Table is less favourable than the earlier Table → A/O shall: (a) inform the applicant of the revised value and draw attention to Rule 28(5) (right to withdraw within 14 days); (b) endorse a copy of this communication to HoO.
Authorization of Payment by the Accounts Officer (Medical Cases)
Subject to Rule 28(2) and (3) provisions, on receipt of documents from the medical authority, A/O shall without delay issue an order to the disbursing authority with:
- ▪️(i) Amount of pension commuted, commuted value of pension, and date on which commutation became absolute
- ▪️(ii) Amount of residuary pension
- ▪️(iii) Form 4 in original
- ▪️(iv) Copy of applicant's photograph as attested by the medical authority
A/O shall also:
- 📋Bring to disbursing authority's notice the Rule 6 proviso regarding the date of reduction in original pension.
- 📩Endorse a copy of the order to the applicant with instruction to collect commuted value from the disbursing authority.
- 📢Bring to the applicant's notice the provisions of Rule 6 proviso.
Final Assessment of Provisional Pension (Medical Cases)
- 💰An applicant (Rule 9(3)) who received commuted value of provisional pension from HoO, shall on final assessment of pension be paid by A/O the difference between commuted value of final pension and commuted value already paid.
- ▪️If applicant was examined by Medical Officer (for provisional pension up to ₹6,000) and on final assessment becomes eligible to commute amount exceeding ₹6,000 p.m. →
- ▪️Difference between commuted value of ₹6,000 p.m. and commuted value of provisional pension → paid without further medical examination.
- ▪️Commutation of pension exceeding ₹6,000 p.m. → only if applicant applies afresh and is declared fit by a Medical Board.
The commuted value of provisional pension (as in Form 3 endorsement) shall be deemed amended with the A/O's authority for the difference between final and provisional commuted values.
Interpretation
Where any doubt arises as to the interpretation of these rules, it shall be referred to the Government in the Department of Pension and Pensioners' Welfare for decision.
Power to Relax
- ⚖️A Ministry/Department may, where satisfied that operation of any rule causes undue hardship in a particular case, by order with recorded reasons, dispense with or relax the requirements of that rule to deal with the case in a just and equitable manner.
- 🔒No such order shall be made except with the concurrence of DoPPW (Department of Pension and Pensioners' Welfare).
Repeal & Savings
- 📜All earlier rules, regulations, orders, and OMs in force immediately before the commencement of these rules (in so far as they provide for any matters contained in these rules) shall cease to operate on commencement of these rules.
- 📋Savings: (a) Any pending application for commutation at commencement shall be disposed of in accordance with the old rules. (b) Anything done or action taken under old rules shall be deemed to have been done/taken under the corresponding provisions of these rules.