Monthly Pension Calculations: Is your basic pension Rs 25,000, Rs 40,000, or Rs 55,000? Know what will be your total pension as per latest DR rates?
Monthly Pension Calculations: Pensioners following Old Pension Scheme (OPS) get their basic pension and dearness relief (DR) as part of their overall pension. The Labour Bureau of the Finance Ministry revises DR in line with DA twice a year. Based on that, what will be the total estimated pension for pensioners with basic pensions of Rs 25,000, Rs 40,000, and Rs 55,000? Know here-
Monthly Pension Calculations, 7th Pay Commission: Pension is the main source of income for a majority of pensioners (state or central government) across India. It's a regular amount that provides pensioners with financial freedom, where they don't have to depend on others for their monthly expenses. Pensioners get their pension under the Old Pension Scheme (OPS) and National Pension System (NPS). They will soon have one more option to choose in the form of Unified Pension Scheme (UPS). Pensioners who follow OPS get a fixed basic pension based on their pension slab. Along with that, they also get dearness relief (DR), which may increases their overall pension substantially. In NPS, the pension depends on the an individual's and their employer's contribution during the employee's service years. How DR works in OPS, and what will be the total pension for pensioners with basic pensions of Rs 25,000, Rs 32,000, Rs 40,000, Rs 47,000, and Rs 55,000? Know here-
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(Disclaimer: Our calculations are projections. Actual calculations may vary.)
How basic pension is determined for pensioners
The basic pension is determined on the basis of the sum of last 10 months' emoluments (basic pay, including grade pay) or sum of last month emoluments (basic pay, including grade pay) prior to retirement, whichever is greater.
Basic pension scale for pensioners
It depends on the pay scale they have retired under. They get their pension according to that scale.
When is pension scale for pensioners decided?
It is decided in every pay commission, which is formed for 10 years. The current basic pension rates are as per the 7th Pay Commission.
What is minimum and maximum pension amount in 7th Pay Commission?
The minimum pension in the 7th Pay Commission is Rs 9,000, while the maximum is Rs 1,25,000.
What is dearness relief (DR)?
DR is the same to pensioners as dearness allowance (DA) is to employees. Pensioners get DR to cover rising expenses due to inflation. Since pay scale is decided for 10 years and can't be changed during a pay commission, the government increases the DR rate twice a year.
How DR is calculated
DR for pensioners is calculated on the basis of All India Consumer Price Index Industrial Workers (AICPA-IW). The labour bureau announces AICPA-IW readings every month, based on which DR is calculated.
What is current DR rate?
The current DR rate is 53 per cent. It was revised in July 2024. The government is yet to announce the DR for this half. The reading for DR will be based on the AICPA-IW reading for December 2024.
How DR impacts pensioner's pension
Let's take the example of a pensioner whose basic pension is Rs 35,000. Let's see the difference in their total pension at 43 per cent and 53 per cent DR rates.
At a 43 per cent DR rate, their total estimated pension will be Rs 50,050.
At a 53 per cent DR rate, their total estimated pension will be Rs 53,550.
Calculations for story
We will calculate the estimated total pension amount for pensioners who have basic pensions of Rs 25,000, Rs 32,000, Rs 40,000, Rs 47,000, and Rs 55,000. We will calculate the total pension at a 53 per cent DR rate.
Total pension with basic pension of Rs 25,000
Dearness relief- Rs 13,250
Overall pension- Rs 38,250
Total pension with basic pension of Rs 32,000
Dearness relief- Rs 16,960
Overall pension- Rs 48,960
Total pension with basic pension of Rs 40,000
Dearness relief- Rs 21,200
Overall pension- Rs 61,200
Total pension with basic pension of Rs 47,000
Dearness relief- Rs 24,910
Overall pension- Rs 71,910
Total pension with basic pension of Rs 55,000
Dearness relief- Rs 29,150
Overall pension- Rs 84,150