Born on the 1st? How Does It Affect Your Pension Commutation Factor at Retirement?

Pension Commutation for those born on the 1st of the month

This is a general query. If a person is born on the 1st of a month, he retires on superannuation on the last day of the earlier month. (e.g., a person born on 1.4.48 retires on 31.3.2008) So he has not attained the age of 60 at the time of retirement. He becomes 60 on the next day (that is 1.4.2008 in the example).

Then, which commutation factor should be used for the pension commutation? 9.8 (corresponding to 61 as is usually done for all) or 10.3 (corresponding to 60 years)?

Thanks in advance,
S S Salvi

Dear Salvi,

As per the example, the employee completed 60 years on 31.03.2008. From midnight of 31.03.2008 to 01.04.2008, he enters into his 61st year.

AMATYA

Hi Amatyaji,

My point is that the age is 59 years, 11 months, and 30 days, not 60 years (2008 minus). To verify the calculations, I counterchecked with an online age calculator: [Online age calculator, calculate your birthday](http://www.easycalculation.com/date-day/age-calculator.php).

Dear Salvi,

As per your calendar calculation, it comes to 59 years, 11 months, and 30 days. When we calculate the age, we assume 30 days in a month. For example, the week starts from Sunday and ends on Saturday, not again on Sunday.

In your case, have you added 15 extra days for leap years? Either you have to count 01-04-48 as the first day, then on 31-03-2008, he has completed 60 years. Or if you have to start the first day from 02-04-48, then he has completed 60 years on 01-04-2008.

Regards,
AMATYA

As per the example, the employee has completed 60 years on 31.03.2008. From midnight of 31.03.2008 to 01.04.2008, he enters into 61 years. Verified the calculation:

<a href="http://agecalculatoronline.com/">Age Calculator Online</a>

Pension Commutation and Birth Date Considerations

Just my 2 cents since a family member is facing a similar predicament. Since he was born on 1 Jun, he retired on 31 May. Thus, for Jun, he received a pension which is 50% of the last drawn salary. Makes sense. But the commutation factor used (incorrectly in my opinion) was for age 61 years and not 60 years, thereby resulting in a lower amount. Thus, he "lost out" on both fronts.

Now consider a hypothetical colleague who was born on 2 Jun. That person would retire on 30 Jun and so receive a full salary for Jun. The CVP factor would be for 61 years. Thus, overall this person would "benefit" on the salary front for his last month of service and "lose out" on the CVP front. Net net, it makes sense for this person.

This, despite whatever age, etc., these online calculators throw up, logically the CVP factor that should be used for people born on the 1st of any month is for (Retirement age minus 1) years.

Commutation Factor

1. At the age of 61 years, the commutation factor is 8.194.

2. An individual Government Servant having a Date of Birth (DOB) from the 2nd of the month onwards will have their next birthday fall on the 2nd onwards.

3. An individual Government Servant with a DOB on the 1st will have their next birthday only on the 1st.

4. As per FR 56(a), if the individual Government Servant has a DOB on the 1st, they are required to retire on the last working day of the preceding month.

5. If, at that time, the individual has not completed 60 years on that day, their next birthday will fall on the 1st of the next month only. For example, if they have a DOB on the 1st of January and retire on the 31st of December, their next birthday will only be on the 1st of January.

6. In that case, the commutation factor shall be 8.287 and cannot be 8.194. However, the Government does not agree with this interpretation.

Commutation Factor:

1. At the age of 61 years, the commutation factor is 8.194.

2. An individual Government Servant having a Date of Birth (DOB) from the 2nd of the month onwards will celebrate the next birthday from the 2nd onwards.

3. An individual Government Servant with a DOB on the 1st will only celebrate the next birthday on the 1st.

4. As per FR 56(a), if the individual Government Servant has a DOB on the 1st, they are compelled to retire on the last working day of the preceding month.

5. If, at that time, the individual is not turning 60 years on that day, their next birthday will fall on the 1st of the next month only. (For example, if their DOB is on the 1st of January and they retire on the 31st of December, their next birthday will only be on the 1st of January.)

6. In such a case, the commutation factor shall be 8.287 and cannot be 8.194. However, the Government does not agree with the aforementioned.

Regards, Jvsr Krishna