7th Pay Commission: Clarification on Dearness Relief, Commutation of Pension Rules

New Delhi: 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 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 or 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 also 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 Department added.

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.

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

The last time Centre hiked Dearness Relief and Dearness Allowance, took it from 34 percent to 38 percent, was March 30, 2022, and the second DA hike was announced on September 28, 2022. The next DA hike is expected in March 2023, about six months from now. Taking into consideration rising inflation and the rise in prices of essential commodities, the Centre is likely to hike DA by 3 to 5 percent.