Calculation of Pension for Railway employees (including Running Staff)

Calculation of Pension for Central Government and Railway employees (including Running Staff)

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Basic Pension/settlement

·         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.

Emoluments
      ·         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.

Calculation

Details of an employee retiring on 31-3-2012 is as follows:

Designation	Station Supt
Qualifying service	35 years
Date of Birth	3-3-1952
Pay	20400
Grade Pay	4600
Basic Pay(Pay + GP)	25000
LAP at credit	250
LHAP at credit	198
PF balance	1,02,345

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

·         Gratuity is calculated as half month emoluments for every completed year of service subject to a maximum of 33 years.

·         Minimum 5 years service is needed for payment of Gratuity.

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

·         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 /-

Provident Fund

·         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 /-