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Calculate Pension , DCRG, Commutation , Family Pension - Study Material for PO/RMS accountant Examination        Types of Pension Cases              (1)       Superannuation             (2)       Family Pension             (3)       Voluntary Retirement (VR )             Rules (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                                                                      DCRG 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                       =   -----------------------------------------                                         4                                    OR                                            Last Salary Drawn   X    SMP                             = --------------------------------------- (in case of Death)                                        2 COMMUTATION ·         At the time of retirement of the employee, a portion of pension can be withdrawn by the employee. ·         A maximum of 40% of pension amount can be withdrawn at the time of retirement. However, depending on the amount withdrawn proportionate amount will be deducted from the Pension amount till 15 years and employee will get reduced Pension till 15 years.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)