Commutation Applied After a Year: Medical Examination and the Rate Table

Commutation after one year of retirement: what changes

In commutation you sell a slice of your basic pension, at most two-fifths of it, for cash in hand; Rule 5 of the 1981 commutation rules fixes that ceiling. The lump sum is the commuted portion times 12 times the factor in the commutation table for your age next birthday.

Usually the choice is made while still in service, by ticking the commutation option inside Form 6-A on Bhavishya; the sale is then complete the day after you retire. Missed that? For twelve months after retirement Rule 13 keeps a door open: send Form 1, no doctor involved, and the sale is complete on the day the Head of Office gets your form.

Once the year is over, the rules treat you differently. Rule 13(2) says a Form 1 received late cannot be acted on, and you must apply afresh in Form 2 under Chapter IV of the rules. Chapter IV requires you to be examined and declared fit by a medical authority. The lump sum is then worked out on your age on the day that authority signs its report, not on the day you applied.

Nothing else about the benefit changes. You can still commute up to 40 per cent; the commuted portion is still restored after 15 years. What changes is that the government is now taking a view on your life expectancy, and you carry the risk of the result.

Which commutation application applies to you

A late finalisation after a case: your year starts later

Rule 4 bars commutation while departmental or judicial proceedings under the pension rules are pending. A retiree drawing provisional pension during an inquiry cannot commute in that period. That would be unfair if the clock kept running, so the rules make an exception: where pension is finalised at the end of the proceedings, the one-year period counts from the date of the orders issued on that finalisation.

In plain terms, a retired accountant whose inquiry ended four years after retirement still has one year from the final order to commute without a medical test. Offices sometimes miss this and send such pensioners straight to Form 2. If that happens, point to the proviso in Rule 13 in writing. Our guide on moving from provisional to final pension explains how that final order is obtained in the first place.

The commutation application after one year, step by step

1. Submit Form 2 to the Head of Office

   Hand Form 2 to the Head of Office where you last served. Your pension bank has no role at this stage. State the fraction you want to commute and attach a nomination for the commuted value. Keep a dated receipt, because the date matters if anything is later disputed.

2. Office forwards the case

   The Head of Office sends Form 2 to the Accounts Officer and sends Form 3 to the medical authority, so that an examination can be arranged. In practice this is where most delay happens, so follow up after three or four weeks.

3. Appear for the medical examination

   You will be told the date and place. Carry the papers listed below and pay the examination fee fixed by the government. If you do not appear without a reasonable cause, the application is treated as withdrawn.

4. Receive Part III of Form 4

   The medical authority records its finding: fit, fit with years added to your age, or unfit. If you are found fit, commutation becomes absolute on the date it signs. Ask for a certified copy straight away, since the 14-day and one-month periods below run from receiving it.

5. Decide within 14 days if years were added

   You may withdraw, reduce the amount, or do nothing, in which case you are taken to accept. If you think the finding is wrong, an appeal within one month is the other route.

6. Payment and the pension cut

   The Accounts Officer authorises payment. Your monthly pension is reduced from the date the lump sum is credited, or three months after the authority is issued, whichever is earlier.

The commutation medical examination: who examines and what they look at

Rule 22 decides the medical authority. A Medical Board examines you if you are commuting an invalid pension, if you were earlier refused on medical grounds, or if the monthly amount being commuted, with anything commuted before, is above the limit in the rule. That limit is Rs 2,000 a month as the rule is worded, which today covers almost everyone. Smaller cases go to a medical officer not below the rank of a Civil Surgeon or a District Medical Officer.

The board is not testing your fitness for a job. It is asking whether your expected lifespan is roughly that of an ordinary person of your age, because the commutation table assumes that. Diabetes or blood pressure under control is common at 61 and often passes without any adverse finding. Uncontrolled conditions, recent cardiac events, cancer under treatment or kidney disease are where years get added or commutation is refused.

Rule 21 asks that the examination be held, as far as possible, before your next birthday. If your birthday is close, mention it when you submit Form 2 and again when you get the appointment. A delay of a few weeks can push you into the next age on the table.

On the day itself, you will be asked to state your medical history in your own words, and that statement is recorded. Be accurate. A past heart procedure or hospital admission often shows up in routine tests anyway, and a board that finds an undisclosed condition is far more likely to refuse than one told about it plainly with reports showing it is controlled. Expect blood and urine tests, an ECG and sometimes a chest X-ray; ask in advance whether you should come fasting, because a rushed sugar reading taken after breakfast can work against you.

The commutation table: values for common ages

Years added to your age: what they cost and your three choices

The table above is the one in force since 2008. When a board finds you fit but adds, say, two years to your age, the office simply reads the factor two rows lower. At 62 the factor is 8.093; with two years added you are treated as 64, and the factor falls to 7.862. On Rs 15,000 a month commuted, that is a drop of about Rs 41,600 in the lump sum.

Rule 28 then gives you 14 days from receiving the certified copy of Part III of Form 4. You can withdraw the application altogether. You can ask to commute a smaller amount. Or you can do nothing, and acceptance is presumed. Once you have appeared before the board, you cannot withdraw for any other reason, so if you are undecided, decide before the examination.

Pensioners sometimes withdraw out of irritation and then regret it. The money lost to added years is real, but it is a percentage of a lump sum, while the reasons you wanted commutation usually remain. Work out the figure first, then decide.

Declared unfit: second examination and appeal

If the medical authority refuses commutation or adds years and you think it got it wrong, Rule 27 allows an appeal within one month of receiving the certified copy of Part III of Form 4. A different Medical Board then examines you. If it reaches a different view, its finding is treated as relating back to the first examination, so your rate is not worsened by the time the appeal took.

Separately, Rule 26 lets you seek a fresh examination by a Medical Board after at least a year from the first one, at your own expense. This suits someone whose condition was temporarily bad, for example a pensioner examined a month after surgery who recovers well. The age used will be your age at the new examination.

Bring evidence to an appeal: recent test reports, a treating specialist's letter on prognosis and a record of how long the condition has been controlled. Boards respond to records, not to a general claim that you feel fine.

Is late commutation still worth it?

There is no single answer, and it is not a legal question. Commutation is a loan you repay through the reduced pension for 15 years. The table works on an interest assumption close to 8 per cent. If your money would earn less than that, or if you need the cash now for something that cannot wait, commuting makes sense. If you have no particular need and your health is uncertain, a full pension may serve your family better.

Some facts help the decision. Dearness relief is paid on the full basic pension even after commutation, so the cut does not reduce DR. Restoration happens 15 years from the date the lump sum is received; the long-running demand for 12 years has not been accepted, and the 15-year rule was upheld by the Delhi High Court in May 2026. No interest is paid if the commuted value is credited late, under a DoPPW order of 31 October 2022. And if the pensioner dies before the medical authority signs the report, commutation never became absolute and no lump sum is paid.

If a later pay revision raises your basic pension with effect from a date before commutation became absolute, the extra commuted value is paid without a fresh application. Our page on commutation value and restoration disputes covers that and the restoration date.

Mistakes that cost late applicants money

• Sending Form 1 after the year is over. The office cannot process it and you lose weeks before being told to file Form 2. Count the twelve months from the date of retirement, not from the date the PPO arrived.
• Applying for less than you need, then applying again. Every further commutation means another examination at an older age. Decide the full fraction once, keeping the 40 per cent limit in mind.
• Not checking the factor used. Offices sometimes read the factor for your present age instead of your age next birthday, or for the date of application instead of the date of the medical report. Compare the payment authority with the table. Our list of checks on a new PPO includes the commutation entries.
• Ignoring a pay revision around the corner. If a pension revision is expected with retrospective effect, the commuted value is topped up automatically for the period covered. Our note on what an 8th Pay Commission pension revision usually involves explains the likely sequence, so you are not tempted to wait without reason.
• Missing the 14-day window. Silence after the report is treated as acceptance. If you are travelling or in hospital, ask a family member to collect the certified copy and write to the office on your behalf.

If the pensioner dies while the application is pending

Families are often surprised by this. For a late application, commutation becomes absolute only when the medical authority signs Part III of Form 4. If the pensioner dies before that, there was no completed commutation, and no lump sum is payable, though the full pension due up to the date of death is paid and family pension follows under its own rules.

If the pensioner dies after the report is signed but before the money is credited, the commutation is complete and the commuted value is paid to the nominee named for it, or to the family if there is no valid nomination. That is why the nomination filed with Form 2 matters, and why it should be consistent with the pensioner's other nominations. A family that finds conflicting nominations should read our guide on a nomination dispute among family members before writing to the office.

Two practical tips from Advocate B.K. Singh

• Prove when Form 1 reached the office. Advocate B.K. Singh often meets pensioners told they missed the one-year limit when they posted Form 1 in time and the office logged it late. Commutation within the year turns on the date the Head of Office receives the form, so send it by a trackable method or hand it in against a stamped receipt, and keep that proof with your pension papers.
• Check your birthday before you fix the examination. A pensioner whose birthday is three weeks away should ask, in writing, for the examination to be held before it. The rules themselves say the board should try to do so, and that request can be worth a full row on the table.

Papers to take to the medical examination and keep on file

• Copy of Form 2 with the office receipt
• Your Pension Payment Order and the latest pension slip
• Proof of age, usually the service book entry or matriculation certificate
• Two recent passport-size photographs and identity proof
• Reports of any chronic condition with the latest test results
• A letter from your treating doctor on how long the condition has been under control
• Receipt for the medical examination fee
• Certified copy of Part III of Form 4 once issued
• Nomination for the commuted value

Time and cost from application to payment

Where a commutation dispute is heard

Most problems with late commutation are solved by letters: a lost Form 2, a slow office, a wrong factor read from the table. When the department refuses to act, wrongly sends a post-finalisation case to Form 2, or applies the wrong age, the dispute is a service matter for the Central Administrative Tribunal. Because Rule 6(2) of the CAT (Procedure) Rules lets retired people file at home, a pensioner who left a Delhi office and moved to Dehradun would go to the Principal Bench, which has handled Uttarakhand since 2023.

The tribunal will not substitute its own medical opinion for that of the board. What it examines is the procedure: whether the right authority examined you, whether you got the certified copy and the 14 days, whether your appeal was decided. A challenge to a medical finding itself works only through the appeal under Rule 27 and the evidence placed before the second board.

Armed forces pensioners have their own commutation rules and go to the Armed Forces Tribunal. CAPF retirees generally approach the High Court. Railway pensioners have separate railway commutation rules; check the current railway instructions issued after the 2026 pension rules, but they still come to CAT.

Railway, defence civilian, postal and invalid pensioners

A retired loco pilot or track maintainer goes through the railway's own medical set-up, usually a railway hospital board, and the forms are the railway versions. A defence civilian, such as a retired chargeman from an ordnance factory, deals with a Head of Office in the defence set-up, and the payment comes through the defence accounts organisation; follow-ups therefore need to go to two offices, not one. Postal pensioners apply through the divisional office from which they retired.

Invalid pensioners are always examined, whenever they apply, because their pension itself rests on a medical finding. They should expect a Medical Board and should carry the papers from the invalidation. Our page on invalid pension after medical retirement covers the pension itself.

What to do this week

Find your retirement date, your date of birth and the date your Form 1 reached the office, if you sent one. If that date was within one year of retirement, you may not need a medical test at all, and you should say so in writing.

If you are past the year, work out the lump sum at your present age and at one or two years added, using the table above. Decide how much you want to commute before you see the board. Then file Form 2 and diarise the 14-day and one-month periods. Our guide on the pension papers timeline in the last 12 months of service is worth passing to colleagues still in service, so they do not face the same choice. For a commutation that has gone wrong, see the commutation disputes page.

To have your papers and dates checked before you apply or appeal, contact Advocate B.K. Singh about your commutation application.