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Compare financial impact of pension commutation vs keeping monthly income
Lumpsum Option Available
Retained Monthly Pension
Total Benefit (Lumpsum + Pension)
Pension commutation is a critical decision at retirement where you elect to convert a portion (typically 25-50%) of your monthly pension into a lumpsum amount, paid immediately, while retaining the remaining pension for life. For government/quasi-government employees with EPS or defined-benefit pensions, this choice is permanent and impacts lifetime income. The decision hinges on your confidence in investment returns: if you believe you can generate 10%+ annual returns through equity investing (and have 20-30 year horizon), commutation is financially superior. However, if you prioritize guaranteed income and peace of mind (especially post-65), retaining the full pension is safer. This calculator uses actuarial formulas to show lumpsum equivalents: a ₹50,000/month pension typically commutes to ₹75-100 lakh (varies by age, interest rates, and mortality tables). Most financial advisors recommend a hybrid approach: commute 50% (get both growth opportunity and guaranteed income) rather than going all-in on either option.
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This calculator is provided for informational and educational purposes only. While we strive for accuracy, results should be verified with official sources or by consulting qualified professionals. Tax laws, rates, and regulations are subject to change. GotRedFlags is not responsible for financial decisions made based on these tools.