PENSION PROBLEM FOR KALAPAKA GUYS AT ACCOUNTS TEST

1. Years of service Calculation (YOS):

Date of joining – date of super-annuation = Years of service
Max., allowable years of service = 33 years
Service weightage (Super-annuation) = 3 years
Service weightage (Voluntary retirement) = 5 years
Note : (1) If years of service is equal to
(a) 29 years 3- months treated as 29 years
(b) 29 years 3 months to 9 months treated as 29½ years
(c) 29 years 9+ months treated as 30 years
(2) While calculating years of service any suspension period should not be
Deducted until and otherwise mentioned.
(3) Any training period is considered as service.
(4) EOL (Extra Ordinary Leave), leaves with salary (EL & CL), Medical leave all
together a maximum of three years only considered for service.

2. Basic pension:
A minimum of 10 years of service is necessary for getting pension. Basic pension is also called
as “Super-annuation pension”.

BP = {Last pay drawn (LPD) x YOS} …….. Always rounded off to upper rupee.
66
3. Death cum Retirement gratuity:
A minimum of 5 years of service is required for getting Retirement gratuity. Always rounded
off to upper rupee. Maximum allowed YoS for calculation of gratuity is 33 years only. There will be
no weightage.
(a) LPD x YOS x 2 or
4
(b) 16.5 x LPD or
(c) 3.5 Lakhs ….If retired after March 2004.
2.5 Lakhs ….If retired after October 1999.
1.75 Lakhs .…If retired before October 1999.
Among (a), (b) and (c) which ever is less is the “Death cum Retirement gratuity” or “retirement
gratuity”.

4. Commutation:
According to AP pension rules an Employee can convert some portion/ part of his pension in to
Cash after his retirement. This is called “Commutation” or also called “Pension commutation”.
Commutation value = (Basic pension x 0.4)
Commutation = Commutation value x Commutation factor.
Decimal value should be shown.
5. Family pension(FP):
The Pension paid to the family (dependent) after death of the employee whether in service or
after retirement. There is no minimum service criteria for Family pension.
(a) If the Employee dies after retirement, 50% of last pay drawn is paid as FP to the
dependent up to 65 years of the Employee. After that 30% of the LPD is paid as
Family pension also called as “Reduced rate of FP” till the death of dependent.
(b) If the Employee dies in service, the FP will be 30% of LPD till the death of the
dependent. In this case if the Employee works for above 7 years, the FP will be 50%
of LPD for a period of 7 years or up to the age of 65 years of the Employee. Which
ever is less is paid and afterwards 30% of LPD as FP also called as “Reduced rate of
FP” is paid till the death of dependent.
Always FP is less than or equal to Basic pension.
Ex:01 June-2003

Calculate Pension, RetirementGratuty, Commuted Value and family Pension admissible to a Board
employee as per the particulars given below.
1) His date of birth 01-01-1945
2) Date of joining 28-04-1965
3) Date of superannuation 31-12-2002
4) Pay drawn as on 31-12-2002 Rs.17,450 in the scale of Rs.9250-350-9600-400-11600-
450-13850-500-16350-550-19100
5) Commuted Value Rs.125.52 per Rupee.
Sol:
Calculation of Years of service:
Date of Superannuation - Date of joining

31-12-2002
28-04-1965
--------------
03-08-37

Years of service 37 (1/2) years.

1) Basic Pension = (Last Pay Drawn X YoS ) / 66 = (17450 X 33 ) / 66 = 8725.00

(Maximum Allowed YoS for BP Calculation is 33 only)

2) Ret.Gratuty a) ( LPD X YoS X 2 ) / 4 = (17450 X 33 X 2 ) / 4 = 287925.00

b) 16.5 X 17450 = 287925.00
c) 250000 (Maximum Allowed Gratuity)
3) Family Pension = LPD X 50 % = ( 17450 X 50 ) / 100 = 8725.00
---Up to 65 Y of the employee
4) Reduced Rate of Family Pension = LPD X 30 % = 5235.00
--- Up to the death of the dependent

5) Commutation = BP X 40 % X Commutation Factor = ( 8725 X 40 X 125.52 ) / 100

= 438064.80

Answer:
1) Basic Pension --- 8725.00
2) Ret.Gratuity --- 250000.00
3) Family Pension --- 8725.00
4) Red.Rate of Family Pension –- 5235.00
5) Commutation --- 438064.80
Ex 02: June-2004

Calculate Pension, Retirement Gratuity, Commuted Value and family Pension admissible to a Board
employee as per the particulars given below.
1) His date of birth 10-03-1946
2) Date of joining 06-02-1974
3) He was sanctioned EOL from 01-07-1996 to 30-06-2000
4) His pay was at Rs.19220.00 and Rs.645.00 FPP with effect from 01-11-2003.
5) The rate of Commutation at the age of next birth day on retirement is Rs. 125.52/Rupee

Sol:
Date of superannuation = DOB + 58 Years
 = 10-03-1946 + 58 = 10-03-2004

EOL Period = 30-06-2000 – 01-07-1998 = 2 Years.

( Up to 3 years of EOL period is allowed for pension calculation)

Last pay drawn = 19220.00 + 645.00 =19865.00 (Increment due on feb – 2004)

YoS:
2004-03-10 – 1974-02-06 = 30 years.

1) Basic Pension = (Last Pay Drawn X YoS ) / 66 = (19865 X 33 ) / 66 = 9933.00

(As the YoS is below max allowed 3 Y grace period will be given)
(Maximum Allowed YoS for BP Calculation is 33 only)

2) Ret.Gratuty a) (LPD X YoS X 2 ) / 4 = (19865 X 33 X 2) / 4 = 297975.00

(Maximum allowed YoS 33 only)
b) 16.5 X 19865 = 327772.50
c) 250000 (Maximum Allowed Gratuity)
3) Family Pension = LPD X 50 % = ( 19865 X 50 ) / 100 = 9933.00
---Up to 65 Y of the employee
4) Reduced Rate of Family Pension = LPD X 30 % = 5960.00
--- Up to the death of the dependent

5) Commutation = BP X 40 % X Commutation Factor = ( 9933 X 40 X 125.52 ) / 100

= 498716.06

Answer:
1) Basic Pension --- 9933.00
2) Ret.Gratuity --- 250000.00
3) Family Pension --- 9933.00
4) Red.Rate of Family Pension –- 5960.00
5) Commutation --- 498716.06

Ex 03: June-2000

Calculate Pension, Retirement Gratuity, Commuted Value and family Pension admissible to a Board
employee as per the particulars given below.

1) His date of birth 02-04-1946

2) Date of joining 10-08-1966
3) Date of Retirement on VRS 31-03-2000
4) Pay drawn as on 31-03-2000 is Rs.17450 in the time scale of Rs. 12500-450-13850-
500-16350-550-19100-600-22100

YoS:
2000-03-31 – 1966-08-10 = 33 and ½ year.

1) Basic Pension = (Last Pay Drawn X YoS ) / 66 = (17450 X 33 ) / 66 = 8725.00

(Maximum Allowed YoS for BP Calculation is 33 only)
2) Ret.Gratuty a) ( LPD X YoS X 2 ) / 4 = (17450 X 33 X 2 ) / 4 = 287925.00
d) 16.5 X 17450 = 287925.00
e) 250000 (Maximum Allowed Gratuity)
3) Family Pension = LPD X 50 % = ( 17450 X 50 ) / 100 = 8725.00
---Up to 65 Y of the employee
4) Reduced Rate of Family Pension = LPD X 30 % = 5235.00
--- Up to the death of the dependent

5) Commuted Value = BP X 40 % = ( 8725 X 40 ) / 100 = 3490.00

Answer:
1) Basic Pension --- 8725.00
2) Ret.Gratuity --- 250000.00
3) Family Pension --- 8725.00
4) Red.Rate of Family Pension –- 5235.00
5) Commuted Value --- 3490.00

Ex 04: June-2001

Calculate Pension, Retirement Gratuity, Commuted Value and family Pension admissible to a Board
employee as per the particulars given below.
1) His date of birth 02-06-1942
2) Date of joining 09-04-1962
3) Date of Retirement 30-06-2000
4) He was availed EOL for a period of 3 y 8 months.
5) He was under suspension for a period of 2 years 3 months which was adjusted as
penalty and shall not count for pension.
6) Pay drawn as on 30-06-2000 is Rs.18000.00
( in the scale of 9250-350-9600-400-11600-450-13850-500-16350-550-1910)
7) commuted Value 125.52 per rupee.

Sol;
YoS:
2000-06-30 – 1962-04-09 = 38 Years 2 Months 21 Days

EOL Period = 3 Years 8 Months

( Up to 3 years of EOL period is allowed for pension calculation)
Suspension Period = 2 Years 3 Months.
( As given shall not count for calculation of pension)

Eligible YoS = ( YoS – (Suspension Period + EOL Period beyond 3 Years)

= 35 years.

1) Basic Pension = (Last Pay Drawn X YoS ) / 66 = (18000 X 33 ) / 66 = 9000.00

(Maximum Allowed YoS for BP Calculation is 33 only)

2) Ret.Gratuty a) (LPD X YoS X 2 ) / 4 = (18000 X 33 X 2) / 4 = 297000.00

b) 16.5 X 18000 = 297000.00
c) 250000 (Maximum Allowed Gratuity)
3) Family Pension = LPD X 50 % = ( 18000 X 50 ) / 100 = 9000.00
---Up to 65 Y of the employee
4) Reduced Rate of Family Pension = LPD X 30 % = 5400.00
--- Up to the death of the dependent
5) Commutation = BP X 40 % X Commutation Factor = ( 9000 X 40 X 125.52 ) / 100
= 451872.00
Answer:
1) Basic Pension --- 9000.00
2) Ret.Gratuity --- 250000.00
3) Family Pension --- 9000.00
4) Red.Rate of Family Pension –- 5400.00
5) Commutation --- 451872.00

Ex 05: Dec-2005

Calculate Pension, Retirement Gratuity, Commuted Value and family Pension admissible to a Board
employee as per the particulars given below.
1) His date of birth 05-09-1945
2) Date of joining 28-05-1973
3) His pay as on 01-06-2002 is Rs. 24230 in the scale of 19220-645-19865-715-23440-
790-25810
4) He was availed EOL for 75 Days from 01-03-2003.
5) He was under suspension from 01-02-2000 to 31-03-2001 and the period of suspension treated as
suspension only.
6) The value of commutation at the age next birthday on retirement is Rs.10.46.
Sol:
Date of Retirement; 05-09-1945 + 58 Years. = 2003-09-30
YoS:
2003-09-30 – 1973-05-28 = 30 Years 4 Months 2 Days = 30 and ½ years.
EOL Period = 2 Months 15 Days
(Up to 3 years of EOL period is allowed for pension calculation)

Effective Increment Date = 2003-05-01 + 2 Months 15 Days = 2003-07-16

= July 1 st 2003

Suspension Period = 2001-03-31 – 2000-02-01 = 1 year 2 Months.

Last Pay Drawn = 24230 + 790 =25020.00

1) Basic Pension = (Last Pay Drawn X YoS ) / 66 = (25020 X 33 ) / 66 = 12510.00

(Maximum Allowed YoS for BP Calculation is 33 only including weightage)

2) Ret.Gratuty a) (LPD X YoS X 2 ) / 4 = (25020 X 30.5 X 2) / 4 = 381555.00

b) 16.5 X 25020 = 412830.00
c) 250000 (Maximum Allowed Gratuity)
3) Family Pension = LPD X 50 % = ( 25020 X 50 ) / 100 = 12510.00
---Up to 65 Y of the employee
4) Reduced Rate of Family Pension = LPD X 30 % = 7506.00
--- Up to the death of the dependent
5) Commutation = BP X 40 % X Commutation Factor = (12510 X .4 X 12 X 10.46 )
= 628102.08
Answer:
1) Basic Pension --- 12510.00
2) Ret.Gratuity --- 250000.00
3) Family Pension --- 12510.00
4) Red.Rate of Family Pension –- 7506.00
5) Commutation --- 628102.08