Dear sir,
The MOST salient feature of Pension
scheme1995 or the Central Pension is the
benefit of COMMUTATION! Till 1985,
for the Central Pensioners, the commuted
Fraction was recovered till the death
of the Pensioner. After the Supreme Court's
Judgment in 1986(9th December, 1986,
in Writ Petition Nos. 3958-61 of 1983 ),
the deduction was restricted to 15years
from the date of commutation.
Those who wept over the loss of Management's PF (at the time of Introduction of Pension Scheme in 1993-95) , has to think TWICE before discarding the option for additional commutation as the spouse or family Members of the Pensioner need not pay anything in case the pensioner dies the very next day or any day after commuting his eligible fraction.
One has to look at the Pension Benefits from "SOCIAL SECURITY" perspective and not to weigh the merits and demerits on a Scale of Profit & Loss to arrive at a decision on commutation. Delayed payment of arrears of Additional Commutation, though it can not be welcomed, may not yield negative return if the delay is not beyond 5years as the in-built interest factor is only 4.75%.
The yield on the Difference to be received on Additional Commutation will be much higher than the Notional Loss! One can not also afford to ignore the financial leverage over the Lump- sum to be received!
A bird in hand, is worth Two in the bush!
M.Perumal