Restore Commuted Pension After 12 Years: Central Government Employees Present Demand Ahead Of Budget 2025

The National Council (Staff Side) Joint Consultative Machinery (NCJCM) has urged the central government to reduce the commuted pension restoration period from the current 15 years to 12 years. In a letter addressed to Union Finance Minister Nirmala Sitharaman, the council emphasised the need for a shorter restoration period, arguing that there is no justification for recovering the commuted pension over 15 years.

The Joint Consultative Machinery (JCM) serves as a platform to foster dialogue between the official side and the staff side of the government to address issues and resolve disputes amicably. Introduced in 1966, this scheme aims to promote cooperation between the central government as an employer and its employees.

Its letter states, “The Staff Side of the National Council (JCM) has been demanding a resolution of the Commuted Pension after 12 years instead of the present 15 years since the Government recovered the entire commuted pension within 11 years with interest. Many of the state governments are restoring the commuted portion of the pension after 12 years. There is no justification for recovering the 40 per cent commuted pension from the pensioners for 15 years. Therefore, it is requested that the government kindly restore the commuted pension after 12 years from the date of commutation”.

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What Is Commuted Pension?

Pension commutation refers to the option of receiving a lump-sum amount from the pension fund instead of monthly payouts. Upon retirement, a person receives a pension based on the accumulated amount in the annuity fund. If the person opts to withdraw a portion of this as a one-time lump sum, it is referred to as a commuted pension. For example, if an individual has Rs 10 lakh in their annuity fund and decides to withdraw Rs 2 lakh as a lump sum, one can withdraw it under the commuted pension option. The remaining Rs 8 lakh is then used to calculate the monthly pension.

Central government employees are allowed to commute up to 40 per cent of their pension. This results in a proportional reduction in the monthly pension until the commuted portion is restored. Under current rules, the restoration of the commuted portion occurs after 15 years from the date of receiving the lump sum.

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Rising Demand Ahead Of Budget 2025-26:

Earlier this month, the Confederation of Central Government Employees and Workers addressed a letter to Cabinet Secretary T.V. Somanathan, urging amendments to the pension commutation rules, and amending Rule 10A of the Central Civil Services (Commutation of Pension) Rules, 1981.

The letter stated, “Though the commutation is optional, the government being a ‘Model Employer’, should view this as a welfare and not as a profit-making measure. The pensioner avails the commutation for their financial commitments only. The policy of the government towards its employees who have served in nation-building for more than 30 years of service should be sympathetic towards its employees, particularly, pensioners. As a model employer, the concept of profit-making for the central government on this issue should not be the criteria for fixing the commutation factor and restoration of commuted value of pension”.

As the government seeks suggestions ahead of the Budget, it is the perfect moment to address concerns. Consequently, the NCJCM and the Confederation are collectively advocating for pension reforms.