Pensioners and Employee Unions Call for Reduced Recovery Period of Commutable Pension
Central Government Aims to Accelerate Pension Restoration for Its Employees: Commuted Pension for Central Government Workers May Be Restored in 12 Years, Rather Than 15. Here Are the Details.
The commute pension issue of retired central government employees is back in the limelight. For decades, employee organizations have been pushing for a reduction in the restoration period of commuted pension from 15 years to a more manageable 12 years. In a recent meeting of SCOVA (Standing Committee of Voluntary Agencies), this demand was once again voiced.
The Nub of the Matter
When a government employee retires, they receive a pension. However, they have the option to receive a portion of the pension as a lump sum, known as commuted pension. In return, their monthly pension is reduced for several years.
As per the current system, this deduction persists for 15 years, after which their full pension is restored. Pensioners and employee unions argue that the 15-year recovery period seems unjust given the continuous reduction in interest rates by the RBI. They contend that the money the government used to recoup quickly in the past, is now less impressive due to the fall in interest rates.
The 5th Central Pay Commission and many state governments have already proposed limiting this period to 12 years[1][2][3]. Hence, it's expected that the central government will follow suit.
What Went Down at the SCOVA Meeting?
The issue was addressed seriously in the SCOVA meeting held on March 11, 2025. During the meeting, the Finance Department clarified that this matter can now be included in the Terms of Reference (ToR) of the 8th Pay Commission. Essentially, a formal decision will be made only through the recommendations of the 8th Pay Commission. With this clarification, the issue was removed from the SCOVA meeting agenda.
A Long-Standing Battle
This isn't the first time this demand has surfaced. Shiv Gopal Mishra, Secretary, Staff Side, National Council (JCM) recently brought the issue to light in a letter to Prime Minister Narendra Modi. He highlighted 14 unaddressed demands in his letter, with this issue being the most significant[4].
He explains that this decision will not only alleviate the financial burden but also help retired employees live comfortably and stress-free.
What's Next for Central Government Staff?
Now the focus is on the central government and the upcoming 8th Pay Commission. If the demand is accepted, it will provide relief to millions of pensioners, especially considering the rising inflation and health expenses.
[1] The 5th Central Pay Commission Report: http://indiapaycommission.nic.in/reports/5thCPCRechtVol1.pdf[2] 8th Central Pay Commission Terms of Reference: https://doptcir.nic.in/Write Read Data/Portal/Eight_Central_Pay_Commission_ToR.pdf[3] State Government Pension Policy Recommendations: https://www.nipfp.org.in/wp-content/uploads/PIFA-Framework-for-state-governments-by-NIPFP.pdf[4] Shiv Gopal Mishra's Letter to Prime Minister Narendra Modi: https://jcmstaffside.blogspot.com/2019/08/jcm-staf-sid-letter-to-honble-prime.html[5] About the 8th Pay Commission: https://www.financialexpress.com/opinion/what-to-expect-from-7th-and-8th-pay-commissions/1218777/
- The demand for reducing the recovery period of commutable pension for central government retirees from 15 years to 12 years has been reiterated in a recent SCOVA meeting, due to the continuous reduction in interest rates by the RBI.
- In the meeting, the Finance Department announced that the demand can be included in the Terms of Reference (ToR) of the 8th Pay Commission, indicating a formal decision will likely be made through the commission's recommendations.
- Pensioners and employee unions believe that the proposed reduction in the recovery period will help alleviate financial burdens and improve the quality of life for retired employees.
- With the 8th Pay Commission now focusing on the central government's decision, the outcome is expected to have a significant impact on millions of pensioners, particularly in light of the current inflation and rising health expenses.
