Pension and Gratuity Calculation Formula. The Details are as under !
- Basic Pay
The basic pay is taken the pay at the time of retirement the individual is drawing. If an employee retires from service on 1st June or after it then 1x Usual Increment is added in his/her basic pay for the pension purpose only. If an employee is drawing PP (Personal Pay), it is also included in his/her basic pay. Same is the case with Special Pay.
The maximum length of service for the pension purpose is 30 years. If an employee has a service more than 30 years then only 30 years service is considered for the pension purpose.
Here is to mention that 65 % of the Gross Pension is taken as Ordinary Pension and the remaining 35 % is taken for the Commute purpose.
Ordinary Pension = Gross Pension x 65 %
Calculation of Commute
Use the following formula for the calculation of commute.
Commute = 35 % of Gross Pension x 12 x Age Rate.