How to calculate Pension,DCRG,Commutation etc...

Types of Pension Cases 
            (1)       Superannuation
            (2)       Family Pension
            (3)       Voluntary Retirement (VR )
(i)           The qualifying service for evaluation of pension is reduced to 10 years w.e.f. 02 09.2008. Earlier it was 33 years.

(ii)       Pension is evaluated on the basis of the last 10 months average pay or last pay drawn whichever is beneficial to retiring employee

Terms related to the PENSION Calculation
            (i)        PENSION
            (ii)       DCRG (Death Cum Retirement Gratuity)
            (iii)      COMMUTATION
            (iv)      RESTORATION of Pension
            (v)       FAMILY PENSION

How to calculate Pension
The pension amount is calculated based on the Basic Pay at the time of retirement, Age, Service years, etc.     It is calculated as 50% of average emoluments of last 10 months salary drawn. It is calculated on Basic and Dearness Pay only.

                               SMP  means Six monthly period of qualifying service
    Formula for Calculation of Pension Amount =    
  50% of Avg. emoluments (last 10 months)    or     50 % emoluments drawn on the retirement                                                                     

  • This is basically known as Gratuity. Gratuity is the amount given to the employee at the time of retirement.
  • It is calculated on Basic, DP and DA.
  • This amount is limited to maximum Rs.1000000 / - only.

Formula for Calculation of DCRG

                                            Last Salary Drawn   X    SMP
                      =   -----------------------------------------

                                           Last Salary Drawn   X    SMP
                            = --------------------------------------- (in case of Death)                                        2

·         At the time of retirement of the employee, a portion of pension can be withdrawn by the employee.
·         A maximum of 40% of pension amount can be withdrawn at the time of retirement. However, depending on the amount withdrawn proportionate amount will be deducted from the Pension amount till 15 years and employee will get reduced Pension till 15 years.

       Formula for calculation of Commutation
       =   Commutation Percent of Full Pension   x  Age Factor  x  12

       Formula for calculation of Reduced Pension
=   (Full Pension – Commutation Percent of Full Pension)
                        +  DA on Full Pension

If employee is dead before attaining his qualifying Service of Retirement, The calculation of DCRG in such case is as follows

DCRG        =      Total Pay X Multiplying Factor

(Total pay = Basic pay + Grade  Pay )

                                                Where Multiplying Factor varies as follows

                                        Service Life                 MF

                                                1  to  5  years                                              6

                                                5 to   20 years                                           12

                                                above 20                    SMP / 2  (in case of death)
                                                                                    SMP / 4  (on retirement)

Method for calculate family pension

Step  1    Calculate  Total Pay   ie  Basic Pay  +  DP ( A= Basic Pay + DP )

Step 2     Calculate  30 % of  Total pay               ( B=  A*30/100)


  1. What Will be the commuttation factor in the case of voluntary retirement at the age of 40

  2. what will be the superannuation date of a govt teacher whose date of birth is 2nd july, if the school reopens on 2nd june

  3. Whether 4.9 yrs can be treated as 5yrs???