What is A Double Pension

What is A Double Pension

The concept of “double pension” is still not clear to many of our friends. There are several questions always asked by many people about what is a double pension. I will provide you with sufficient details about the queries about double pension in Pakistan.

Frequently Asked Questions (FAQ):

  1. Does the pension become double upon restoration of commuted part
  2. Is doubling the pension at the age of 75
  3. Does direction by High Court [upheld by Supreme Court] override pension rules

Clarification of Double Pension 2022


Commutation of pension was regulated by Civil Pensions (Commutation) Rules 1925.  Rule 3 entitled the Government servants to commute a portion [not exceeding one-half] of the pension against a lump payment. Rule 6(2) prescribed that the commutation was final and absolute.  Title of the government servant to receive the commuted part ceased forever, and only the un-commuted part remained receivable. This was also commonly known as “selling” half the pension for good.

Increases in pension however continued to be allowed on Gross Pension up to and including the 1999 increase.  Para 2 of the 1999 increase orders specified that:

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“For the purpose of admissibility of the increase in pension sanctioned in this O.M., the term ‘Pension’ means:

pension before commutation and or surrender of ¼ for gratuity;

    plus

dearness / adhoc increases / indexation in pension sanctioned from time to time.

Termination of commuted pension against lump grant was reversed in 1985 after government issued orders that the commuted portion would be restored upon expiry of the number of years for which commutation value had been received.  If a pensioner had got 50% pension commuted on 1.7.1970 and received 15 years’ commutation value, the commuted part stood restored from 1.7.1985.  And if a pensioner retired on 1.7.1984, the commuted part was restorable from 1.7.1999. For all these years, the increases continued to be allowed on “Gross Pension plus previous increases”.  This practice was changed from 2001.

2001 Pay scales-cum-Pension Scheme

Two major “reforms” were introduced in pension from 1.12.2001- (A) The benefit of restoration of commuted part was withdrawn under Para 16 (e) of the orders; and (B) increases in pension from 2001 onward were reduced to Net Pension [instead of Gross Pension] under para 16 (f).  The second reform simply meant that increases from 2001 onward were no longer admissible on the 50% commuted part.

Those pensioners who had retired before 2001 pay scales were getting increases on both parts [(A) Un-commuted and (B) Commuted] up to and including the 1999 increase. To illustrate this, consider the case of a pensioner who retired in pay scale 16 on 1.1.1991 with a gross pension of Rs.2,000 out of which 50% (Rs.1,000) had been commuted.  The 1991, 1995, 1997 and 1999 all increases are equal on both un-commuted and commuted parts, as per rows 3 and 8 of Table A given at the end.  However, two figures are given for the 2001 increase, (i) if it was on Gross, and (ii) actual given on Net.  The actual increase on Net Pension is Rs.100 lesser as shown in rows 8 and 11 than what would have been on Gross.

Para 16 (e) of the 2001 Orders [through which restoration of commuted part of pension was discontinued] was soon reversed in respect of persons who had already retired before 2001 orders.  One such pensioner took up the legal stand that upon restoration, both halves [un-commuted as well as commuted] of pension, plus all increases, should be equal.  If otherwise, the restoration would be erroneous.  For this purpose, the increases (not actually given on commuted part from 2001 onward) should be given, at least on notional basis, upon restoration of that part from the date of restoration.  This is illustrated in respect of a government servant whose period of commutation expired on 31 Dec 2005, and restoration fell due on 1 Jan 2006, in Table B at the end.

This petition was accepted by Court with the observation that restoration means bringing back into original condition.  If both parts were equal to begin with, then both parts along with all increases should be equal upon restoration too.   Otherwise the restoration would be imperfect.  Directions by court included that on restoration, the amount of commuted part should be increased notionally to bring it equal to the un-commuted higher part, thus making the two halves equal, and the total equal to double of the higher amount.  In other words, the total pension upon restoration should be double the amount of un-commuted pension along with increases on restoration date.

This doubling formula is based on factors listed below.  If any factor varies, the formula may not be applicable.  For example, if the commutation was only 25%, the doubling formula will not apply.

  • Exact 50% of Gross Pension was commuted. [Pensioners have the option of getting less than 50% commuted].
  • Pensioners retired at the age of 60.  [In certain cases, pensioner may seek pre-mature retirement, or retire on medical grounds, at a younger age].
  • The commutation value was received for 15.4649 [15 rounded off] years, on expiry of which period, restoration fell due.  [The number of years may be higher for persons retiring at a younger age than 60].

The Court further directed that the increased pension would be admissible from date of restoration, and no arrears for the period prior to restoration would be admissible.

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Notional increase

There are two methods to determine how much notional increase would make the two halves equal upon restoration.  The one generally practiced by Accounts Offices is to calculate on notional basis all increases on Gross Pension, and then pay the difference from the date of restoration of commuted portion of pension.

The second method is to calculate the amount of all increases NOT given on the commuted part from 1.12.2001 till restoration date.  And then add the commuted amount, plus the amount of all such increases to the pension on restoration date.

If the calculations are correct, both methods would yield the same result, and the amount of pension upon restoration would be the same, and double of the un-commuted part + increases.


Double Pension Chart 2022


Table A, all increases on Gross Pension up to 1999, and 2001 increase on Gross / Net

All increases on Gross Pension 2001 increase on Net Pension
Increases on Un-Commuted Part Increases on Un-Commuted Part
Year 1991 1995 1997 1999 Year 2001 2001
1 Increase on 1,000 1,050 1,208 1,304 Increase on 1,435 1,435
2 increase % 5 15 8 10 increase % 10 10
3 Increase Rs 50 158 97 130 Increase Rs 143 143
4 With increase 1,050 1,208 1,304 1,435 With increase 1,578 1,578
5 Net received 1,050 1,208 1,304 1,435 Net received 1,578 1,578
Increases on Commuted Part Increases on Commuted Part
Year 1991 1995 1997 1999 Year 2001 2001
Gross Net
6 Increase on 1,000 1,050 1,208 1,304 Increase on 1,435 435
7 increase % 5 15 8 10 increase % 10 10
8 Increase Rs 50 158 97 130 Increase Rs 143 43
9 With increase 1,050 1,208 1,304 1,435 With increase 1,578 478
10 Less commuted (1,000) (1,000) (1,000) (1,000) Less commuted (1,000)
11 Net received 50 208 304 435 Net received 578 478
Increases on Both Parts Increases on Both Parts
Year 1991 1995 1997 1999 Year 2001 2001
12 Increase on 2,000 2,100 2,415 2,608 Increase on 2,870 1,870
13 increase % 5 15 8 10 increase % 10 10
14 Increase Rs 100 315 193 261 Increase Rs 287 187
15 With increase 2,100 2,415 2,608 2,869 With increase 3,157 2,056
16 Less commuted (1,000) (1,000) (1,000) (1,000) Less commuted (1,000)
17 Net received 1,100 1,415 1,608 1,870 Net received 2,156 2,056

Table B, showing notional increase of Rs.614.14 from date of restoration 1 Jan 2006

Date Row # Item Including commuted 1,000 Excluding commuted 1,000 Diff
Rs Rs Rs
1-Jan-91 1 Pension 2,000.00 1,000.00
1991~99 2 Increases to 1999 on Gross 435.00 435.00
3 With increases 2,435.00 1,435.00
1-Dec-01 4 10%  increase on Net 243.50 143.50 100.00
5 With increase 2,678.50 1,578.50
1-Jun-03 6 15%  increase on Net 401.78 236.78 165.00
7 With increase 3,080.28 1,815.28
1-Jul-04 8 16%  increase on Net 492.84 290.44 202.40
9 With increase 3,573.12 2,105.72
1-Jul-05 10 10%  increase on Net 357.31 210.57 146.74
11 With increase 3,930.43 2,316.29
1-Jan-06 12 Commuted part restored 1,000.00
13 Total with restoration 3,930.43 3,316.29 614.14
14 Notional increase 0.00 614.14
15 With increase 3,930.43 3,930.43
16 Total of both parts 7,860.86
17 Double of 3,896.55 7,860.86

Credit: Mr. Agha Amir

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