7th Pay Commission: Clarification On Dearness Relief, Commutation Of Pension Rules. Here’s What Pensioners Should Know

The clarification in regard to DR benefit for retired central government employees said that Dearness Relief is payable on original basic pension before commutation

The Centre has offered relief to central government pensioners by issuing a clarification on payment of Dearness Relief (DR) after the commutation of pension. The memorandum has been issued by the Department of Pension & Pensioners’ Welfare (DoPPW) under the Ministry of Personnel, Public Grievances & Pensions.

The DoPPW has also clarified the amount of pension to be considered for commutation.

The clarification in regard to DR benefit for retired central government employees said that Dearness Relief is payable on the original basic pension before commutation. Issuing clarification on pension calculation, the Department of Pension & Pensioners’ Welfare said, "References/Representations have been received in this Department seeking clarification whether the Dearness Relief is payable on original basic pension or on pension as reduced after commutation. It is clarified that dearness relief is payable on the original basic pension before commutation or such basic pension before commutation as revised on implementation of recommendations of Pay Commission etc. and not on the pension as reduced after deduction of commuted pension."

The clarification will quell concerns about whether the DR benefit is payable on the original basic pension before commutation or on the reduced pension after commutation.

What’s dearness benefit?

Under Rule 52 of CCS (Pension) Rules, 2021, retired central government employees and family pension beneficiaries get DR to pare the inflation. The DR is based on rates subjected to conditions as the central government may specify from time to time.

Also, note that benefit is availed by those who are drawing compassionate allowance under Rule 41. It is payable half-yearly and the central government announced DR allowance along with the Dearness Allowance (DA). Central government employees in service avail DA hike while the DR hike is applicable to central government pensioners, including family pensioners.

Under 7th Central Pay Commission (7th CPC), existing or current DR rates for central government pensioners is 38 per cent, which is calculated on the basic pension before commutation and not on the reduced pension after commutation. The DR rate of 38 per cent is applicable from 1st July 2022 as central government recently announced 4 per cent DA and DDR hike.