A public sector bank pension under the Pension Regulations 1995 is half the average pay of the last ten months for 33 years of service, plus dearness relief. Dearness relief is currently 27.83% for anyone who retired on or after 1 November 2022, and it is higher for earlier retirees. The calculator below works out basic pension, dearness relief, the commutation lump sum and family pension. If you already draw a pension, switch the calculator to "Basic pension" to see your dearness relief alone.
By Vishvas Yadav · Updated 6 October 2026 · Dearness relief for August 2026 to January 2027
Bank pension at a glance
| Item | Rule |
|---|---|
| Who is covered | Employees on the bank pension scheme; those who joined from 1 April 2010 in most public sector banks are in NPS instead |
| Basic pension | 50% of the average pay of the last ten months, for 33 years of qualifying service; proportionately less for shorter service |
| Minimum service | 10 years |
| Dearness relief | Revised every six months; 27.83% of basic pension for August 2026 to January 2027 for retirees from 1 November 2022 |
| Commutation | Up to one-third of basic pension; restored after 15 years |
| Family pension | 30% of pay last drawn, without a ceiling; up to 50% for a limited period after the death of an employee or pensioner with at least seven years’ service |
| Pension updation | Not agreed; pensions are not revised when a new settlement changes pay scales |
Who gets a bank pension and who is in NPS
The bank pension scheme is a defined-benefit scheme under each bank’s Employees’ Pension Regulations, 1995. It covers employees who joined before their bank moved new recruits to the National Pension System, which in most public sector banks happened from 1 April 2010, and earlier employees who opted for pension. An NPS member does not receive a pension under these regulations at all. Their retirement income comes from the NPS corpus, built from 10% of pay plus DA from the employee and 14% from the bank, part of which buys an annuity.
The rest of this page applies to pension optees only.
How basic pension is calculated
Under Regulation 35 of the Pension Regulations, basic pension for an employee with 33 years of qualifying service is fifty per cent of average emoluments, meaning the average pay of the last ten months of service. Shorter service gets a proportionate amount, and 10 years is the minimum to qualify.
Three details decide the figure:
- What "pay" means. For officers retiring under the 9th Joint Note, pay for superannuation is basic pay with stagnation increments, professional qualification pay, officiating pay and the increment component of fixed personal pay; the 12th Bipartite Settlement uses the same components for clerical and subordinate staff, plus special pay. Special allowance and DA are not included, so a pension worked out from gross salary is far too high.
- Broken years. A part-year of more than six months counts as a full year; six months or less is ignored.
- Voluntary retirement. Qualifying service can be increased by up to five years, but not beyond 33 years or beyond the date of superannuation, and the added years do not change the pay used.
Worked example
A Scale III officer retires at 60 with 33 years of service, having drawn ₹1,05,280 (the top of the scale) for the last ten months. The figures are illustrative and use the rates in force for August 2026 to January 2027.
| Step | Working | ₹ a month |
|---|---|---|
| Basic pension | 50% of 1,05,280 × 33/33 | 52,640 |
| Dearness relief | 27.83% of 52,640 | 14,650 |
| Pension before commutation | 67,290 | |
| Commuted portion (one-third) | 52,640 ÷ 3 | 17,547 |
| Pension after commutation | 35,093 basic + 14,650 relief | 49,743 |
| Commutation lump sum | 52,640 ÷ 3 × 12 × 9.81 (age 61 next birthday) | 20,65,594, paid once |
Dearness relief stays on the full basic pension of ₹52,640, not on the reduced ₹35,093, so commuting costs less each month than it appears. And with 26 years of service instead of 33, the same officer’s basic pension would be ₹41,474, which is why the exact count of qualifying service matters.
Dearness relief by retirement date
Each pension is fixed on the pay scales in force at retirement, with that settlement’s DA already merged in, so dearness relief is counted from that settlement’s own base. That is why the rates differ so widely. They are revised every six months, in February and August. The rates below are from IBA circular CIR/HR&IR/77/D/2026-27/3436 of 3 August 2026, and are also set out in AIBEA circular 30/11/2026/37.
| Retired | Dearness relief, Aug 2026 to Jan 2027 |
|---|---|
| On or after 1 November 2022 | 27.83% |
| 1 November 2017 to 31 October 2022 | 62.37% |
| 1 November 2012 to 31 October 2017 | 136.90% |
| 1 November 2007 to 31 October 2012 | 265.50% |
| 1 November 2002 to 31 October 2007 | 343.26% |
| 1 April 1998 to 31 October 2002 | 493.92% |
| 1 November 1992 to 31 March 1998 (officers from 1 July 1993) | 767.20% |
| Before 1 November 1992 (officers before 1 July 1993) | 1560.43% |
The same rate applies to family pension. Serving employees’ DA moves every quarter, so in a given month a pensioner’s relief rate and the DA on the bank DA page can differ; the next relief revision is due from 1 February 2027.
Family pension
Since the Government approved the change in August 2021, ordinary family pension is 30% of the pay last drawn, without a ceiling. Before that it was paid in slabs of 15%, 20% and 30%, capped at ₹9,284 a month. Dearness relief is paid on family pension at the same rate as on pension.
Where an employee dies after at least seven years of continuous service, the regulations provide an enhanced rate: 50% of the pay last drawn, or twice the ordinary family pension if that is less. It is paid for seven years, or until the date the employee would have turned 65, whichever is earlier, and after a death following retirement it cannot exceed the pension the employee was drawing. After that period the ordinary rate applies.
Commutation of pension
A pensioner can commute up to one-third of basic pension for a lump sum. The lump sum is the commuted monthly amount × 12 × the commutation value for the age on the next birthday, from the table in the regulations:
| Age next birthday | 58 | 59 | 60 | 61 | 62 |
|---|---|---|---|---|---|
| Commutation value | 10.78 | 10.46 | 10.13 | 9.81 | 9.48 |
The commuted portion is restored after 15 years. At age 61 the lump sum equals about 9.8 years of the commuted pension, while the deduction runs for 15 years, so the choice turns on what the lump sum will earn or what it is needed for. Gratuity and leave encashment are separate payments; see the gratuity calculator.
Pension updation
When a new settlement raises pay scales, existing pensions are not recalculated on the new scales. Pension updation, revising past pensions in line with each wage revision, is a long-standing demand of pensioners’ associations and the unions. As at 6 October 2026, no settlement or Government approval provides for it, and nothing on it has been agreed for the 13th Bipartite Settlement, which is due from 1 November 2027 and has not been signed. Until that changes, a pensioner’s income rises only through dearness relief.
For pay in the years before retirement, use the 12th Bipartite Settlement salary calculator, or the 11th BPS salary calculator for those who retired between November 2017 and October 2022. For how settlements are negotiated, see the complete guide to Bipartite Settlements.
Frequently asked questions
How is bank pension calculated?
Basic pension is 50% of the average pay of the last ten months of service, multiplied by qualifying service up to 33 years and divided by 33. Pay means basic pay with stagnation increments and qualification pay; special allowance and DA are not included. Dearness relief is added on top.
What is the family pension for bank employees?
30% of the pay last drawn, without a ceiling, plus dearness relief at the pensioners’ rate. After the death of an employee or pensioner who had at least seven years’ service, an enhanced rate of up to 50% of pay is paid for seven years or until the employee would have turned 65, whichever is earlier; for a pensioner it cannot exceed the pension being drawn.
What is the DR for bank pensioners?
For August 2026 to January 2027 it is 27.83% of basic pension for those who retired on or after 1 November 2022, and 62.37% for those who retired between November 2017 and October 2022. Earlier retirees get higher rates because their pensions rest on older scales. It is revised every six months.
What is pension updation for bank retirees?
Revising existing pensions whenever a new settlement raises pay scales. It has not been agreed: as at October 2026, bank pensions are fixed at retirement and rise only through dearness relief.
Can bank employees under NPS get pension?
Not under the Pension Regulations 1995. Employees who joined from 1 April 2010 in most public sector banks are in the National Pension System, where retirement income comes from the accumulated corpus and an annuity bought from it.
This calculator estimates pension under the Pension Regulations 1995 using the published rates. Your bank’s pension department applies your exact service, pay record and any commutation already made. Found a figure that looks wrong? Tell us.
Written by Vishvas Yadav, Senior HR | Payroll & Compliance Professional, Founder of HR Calcy.