Besides monthly pension, a retiring railway servant gets a set of lump-sum and continuing benefits: commuted value of pension, gratuity, provident fund balance, insurance, leave encashment, composite transfer grant, post-retirement passes, medical cover under RELHS and holiday homes.
Commutation of Pension
- Commutation is optional. Up to 40% of the basic pension can be commuted (exchanged for a lump sum).
- No medical examination is needed if applied for within one year of retirement; after one year a medical examination is required.
- Lump sum = commutation value (from the table for age at next birthday) × 12 × pension commuted per month.
- The commuted portion is restored after 15 years from the date of commutation. Commutation does not affect family pension.
- The pension left after commutation is called residual pension.
| Age next birthday | Commutation value for pension of Re 1 |
|---|---|
| 55 | 8.627 |
| 58 | 8.446 |
| 60 | 8.287 |
| 61 | 8.194 |
| 62 | 8.093 |
Gratuity
- Retirement gratuity needs at least 5 years of qualifying service. It is ¼ of emoluments (basic pay + DA) for each completed six-monthly period, up to 16½ times emoluments.
- Formula: (Pay + DA) × number of completed six-monthly periods ÷ 4.
- The ceiling on retirement/death gratuity is Rs 20 lakh from 01.01.2016, rising by 25% whenever DA rises by 50% of basic pay.
- Death gratuity is paid if a railway servant (permanent or temporary) dies in service.
Provident Fund and Insurance
- Provident fund is governed by the Provident Funds Act, 1925. Pensionable staff subscribe to the SRPF (Non-Contributory) from the month after completing 1 year of continuous service, or from confirmation, whichever is earlier.
- The compulsory subscription is 8⅓% (1/12) of emoluments for non-contributory and 10% for contributory fund members.
- Final withdrawal is allowed after 15 years of service or within 10 years of superannuation. Co-operative society or bank loans cannot be recovered from PF.
- Deposit-Linked Insurance: on death in service, the family gets an extra amount equal to the average PF balance of the preceding 36 months, up to Rs 60,000, if the subscriber had at least 5 years of service and kept the minimum balance.
- Central Government Employees Group Insurance Scheme (from 01.11.1980): Group C pays Rs 30 a month for cover of Rs 30,000 (Group B Rs 60 for Rs 60,000, Group A Rs 120 for Rs 1,20,000).
Other Benefits After Retirement
- Composite Transfer Grant: 80% of one month's basic pay on settling at a new place; one-third of a month's pay if settling within the same city or within 20 km of the old headquarters.
- Retired Employees Liberalised Health Scheme (RELHS): needs at least 20 years of qualifying service (not required for medical invalidation or death); a one-time contribution is paid, e.g. Rs 54,000 or last basic pay, whichever is lower, for Level 6.
- Fixed Medical Allowance of Rs 1,000 a month is paid to pensioners eligible for RELHS but not enrolled, or living beyond the prescribed distance from a health unit.
- Leave encashment up to 300 days, post-retirement complimentary passes (2 sets a year for non-gazetted staff after 20 years), and holiday homes at nominal charges.
- Constant Attendant Allowance of Rs 6,750 a month is paid with disability pension for 100% disability when a constant attendant is needed.
Exam Focus
Commutation up to 40%, restored after 15 years; gratuity ¼ of emoluments per six-month period, maximum 16½ times, ceiling Rs 20 lakh; PF subscription 8⅓%; DLI up to Rs 60,000; RELHS needs 20 years of service; Composite Transfer Grant 80% of a month's pay.