Calculate Pension and Commute Formula.
The calculation of Pension and Commute is very simple. An employee can calculate his/her pension and commute himself/herself. The main things in pension calculation are basic pay and total service at the time of retirement. The formula for pension calculation is as under:
Gross Pension = Basic Pay x Service (Maximum 30 years) x 70/3000
Ordinary Pension = Gross Pension x 65 %
Commute = 35 % of Gross Pension x 12 x Age Rate
If you don’t want to calculate the pension and commute manually, then you can simply use the Pension Calculator 2019-20 and this calculator is updated every year just after 1st May after the revision of pay scales or increase in pension and adhoc allowance.
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.