Commutation of Pension- Regulation 41 of Employees' Pension Regulations.

INDIAN BANKS ASSOCIATION

HR & INDUSTRIAL RELATIONS

HR&IR/C/2023/ September 11, 2023

CGM/GM HR of PSBs

Dear Sir/Madam,

Commutation of Pension- Regulation 41 of Employees' Pension Regulations.

We have been receiving queries from Banks seeking clarifications that whether in case of an employee retiring on the afternoon of the last day of the preceding month whose 60th birthday falls on the 15 day of the next month, can calculate commutation by considering commutation factor of 60th Birthday.

2. The matter was placed for discussion in the meeting of the IBA Standing Committee on HR. The Committee noted the below points and recommended that an advisory may be sent to banks, which was subsequently approved by the Managing Committee of IBA:-

a.       As per Regulation 41 (6) of Bank Employees Pension Regulation, 1995, the commutation becomes absolute on the day following the date of superannuation.

b.      Since the commutation is being paid on the next day of the retirement and become absolute and the age as on next birthday will be 61 for the employee born on 1" of the month when the commutation is being paid, the factor applicable to the age 61 has to be considered as commutation factor.

3. Banks may please be guided accordingly.

Yours faithfully,

Brajeshwar Sharma

 Senior Advisor (HR&IR)