Basic Pension is calculated as the last month emoluments or average of last 10 month emoluments which is higher. Normally higher of this will be last month emoluments unless the employees Pay was reduced in last months due to a punishment etc.
For Doctors - Basic Pay(Pay + GP) plus NPA(Non Practicing Allowance)
For other employees - Basic Pay(Pay + GP)
For Railway Running staff (Loco Pilots, Asst Loco Pilot, Guards) 55% of Basic Pay is added to the basic pay for all pension calculations.
Details of an employee retiring on 31-3-2012 is as follows:
Date of Birth
Basic Pay(Pay + GP)
LAP at credit
LHAP at credit
Imagining that the Railway servant in question didn’t get a pay reduction in the last 10 months,
His emoluments will be equal to Last Basic Pay(Pay + GP) = Rs. 25000
His Basic Pension ( 50% of emoluments ) = Rs. 12500/-
Now he has two options:
Option 1 : He doesn’t opt for commutation.
If the employee doesn’t opt for Commutation he has get the Basic Pension Rs. 12500 plus applicable DR(Dearness Relief) on this(65% from 1.1.2012)
Option 2 : He opt for commutation
Maximum 40% of the Basic Pension can be commuted.
Commutation amount = Age factor x 12 x (40% of Basic Pension) = 8.194 x 12 x (40% of 12500) = Rs. 4,91,640
(No DA/DR is paid on this and hence DR will be paid on the full Pension amount monthly)
Now for the first 15 years the employee get the remaining amount pension ie, 60% of 12500 = Rs.7500 (plus DR calculated on full pension or Rs. 12500).
After the expiry of 15 years the employee gets full pension as that in Option 1
Gratuity is calculated as half month emoluments for every completed year of service subject to a maximum of 33 years.
Emoluments for purpose of Gratuity
For Doctors : (Pay + GP +NPA )+ DA
For other employees :(Pay + GP) + DA
For Running Staff : (Pay + GP + 55% as Pay element of Running staff) + DA
Maximum of amount of Gratuity will be 10 Lakhs.
In the illustration above,
Service is 35 years, but maximum is 33 yrs.
Emoluments (for this purpose includes DA also) = 20400 + 4600 + (65% of 25000) =41250
Hence Gratuity = 16 ½ * 41250 = Rs.6,80,625
Leave encashment upto 300 days (both LAP and LHAP combined) is permitted.
The above employee has 250 LAP and 198 LHAP.
So in his case 250 LAP and 50 LHAP (total 300) will be encashed.
Encashed amount of LAP (for 250 LAP) = (Pay + GP + DA applicable) / 30 * LAP at credit = (20400 + 4600 + 16250) /30 x 250 = Rs. 3,43,750 /-
Encashed amount of LHAP (for 50 LHAP) = (Pay + GP DA applicable) /2/ 30 * LHAP at credit (subj to overall limit of 300) = (20400 + 4600 + 16250) /2/ 30 x 50 = Rs. 34,375 /-
Total amount of leave encashment = Rs. 2,29,166 /-
Balance at the credit of employee’s SRPF is paid at the time of his retirement along with interest accrued.
Final settlement money for the above employee
Pension commuted = Rs. 4,91,640
Gratuity = Rs.6,80,625
Leave encashment = Rs. 2,29,166
PF Balance = Rs.1,02,345
Total settlement amount = Rs. 15,03,776 /-