Pension commutation explained with a worked example

What commuting part of the pension means, the formula, the commutation factor table, and restoration after 15 years.

Updated 09 Oct 2026 · by Mustfa Software

Commutation means taking a lump sum now in exchange for a part of your monthly pension. The commuted part is cut from the pension for 15 years and then added back ("restoration").

General information only. The percentage you may commute, the factor table and dates follow the orders that apply to you — check your PPO and SPARSH. Armed Forces personnel can generally commute up to 50% of basic pension; for civilians the usual limit is 40%.

The formula

Lump sum = commuted pension per month × 12 × commutation factor

The commutation factor depends on your age on your next birthday after the pension starts. Some values from the table in use:

Worked example

• Basic pension: ₹30,000 a month; age next birthday: 40 (factor 9.090)
• Commute 50%: ₹15,000 a month
• Lump sum = 15,000 × 12 × 9.090 = ₹16,36,200
• Monthly basic pension for the next 15 years: ₹30,000 − ₹15,000 = ₹15,000 (DR is still worked out on the full ₹30,000)
• After 15 years the ₹15,000 is restored and the basic pension is ₹30,000 again (plus any revisions).

Should I commute?

It depends on what you will do with the money. A lump sum helps for a house, a loan payoff or a child's education. If it would only sit in a low-interest account, the monthly pension you give up may be worth more. Discuss it with your family before you decide; once done, commutation cannot be reversed.

Restoration date

Count 15 years from the date the commuted pension started being deducted (normally the day after retirement/discharge). Mark that date — if restoration does not appear in the slip, raise it on SPARSH.