Commutation of Pension

Don’t lose Big time by not commuting your Additional Pension – Part 2

Col Sanjeev Govila (retd), CEO, Hum Fauji Initiatives

Dear Friends,

I have been writing on the subject of commutation of pension for quite sometime and the reasons why commutation of pension (and the subsequent additional commutation of pension consequent to option given under 7th CPC to officers retired on or after 1st Jan 2016) would be a good idea. Please refer my last article available at http://humfauji.in/commutation-of-pension/.

I had got many counters and replies to that article through different media. It was so very heartening to see a healthy debate taking place among faujis on a purely financial subject. This is quite a departure from the past where nobody talked about money, nobody read about money and consequently, nobody knew about money and its management in fauji community….ever. Defintely a very positive development now.

On the other hand, I would attempt to once again bring out the rationale for I persistently recommending commutation of pension.

Commutation is like taking a loan from the Govt at about 8.6% per annum:
• the Govt gives you a bulk amount (ie, next 15 year’s pension is given in a lump sum today),
• you pay a certain EMI (ie, a constant amount taken out from your pension over those 15 years),
• after 15 years, the loan gets fully paid and the reduction in your pension is restored back (implying no further EMI is to be paid).

*There is a sweetener to this loan:* The 8.6% interest rate also includes the cost of a surety that if something happens to you during the loan period, your family doesn’t have to return anything and the EMIs will also not be deducted any longer.

*Let me add another sweetner to it:* If you don’t take the loan, the EMIs that you don’t pay (ie the non-commuted pension that you get) will be taxable but if you take the loan, the loan amount given to you is tax-free? And if you get a good person to advise you or if you are yourself financially savvy enough, you may not pay any tax on the returns that you generate from the loan amount for most of the time while still being invested in a very safe manner!

*I again add one more sweetner:* If you invest this loan amount even at a safe 7% interest rate, you can get the very same monthly returns as the part of pension you’ve been missing out due to commutation and still have Rs 25 – 29 Lakhs extra left at the end of the loan period of 15 years? Alternatively, you can get additional pension of about Rs 9-10,000 per month if you do not want more monthly money now and do not care for any balance amount at the end of 15 years.

If you read and understand the above carefully, you will find that you are actually a loser if you do not commute! Does pension commutation really seem like a bad deal? I think, all, except only some scepticals, would go in for such a low cost loan with such a surety. Hundreds of officers have taken huge home, car, personal and credit car loans at much higher rates of interest and with no such surety, unless they take a separate insurance to cover the loan.

Of course, if you take the commutation amount and then invest it in tax-inefficient products like bank FDs, Post Office Monthly Income Scheme (PO MIS), Senior Citizen Savings Scheme (SCSS) etc, then it is better that you do not commute. The reason is that these three ‘popular’ investment products will actually give you just 5%, 6.24% and 6.72% returns respectively if we assume all officers will be at least in the 20% tax bracket. And if you happen to be in 30% tax bracket due to re-employment or any other civil employment, your returns further dwindle down to 4.55%, 5.46% and 5.88% respectively.

*What about the officers who have tax-free pension due to gallantry awards or disability pension? *
It makes all the more sense for them to commute since they get the tax edge and can invest even in POMIS and SCSS though the investment amount in these schemes is limited to Rs 4.5 Lakhs per head and Rs 15 lakhs respectively. They should still shun bank FDs due to their low returns. However if you decide to go in for professional advice and take a cutomised mutual fund portfolio with an optimum mix of Debt Funds and Equity Funds (if you’re comfortable with them) as per your needs and comfort level, you would be much better off.

The question that now arises is, if commutation is so good, why are few people opposing it vehemently. I could think of only two reasons.

First reason could be their pre-supposition that faujis are a gullible lot, have no financial knowledge and can be easily misled by others – hence, they should not attempt to take this bulk amount since they would not be able to invest it properly! This is not true, as has been my experience of dealing with hundreds of officers and their families over the past eight years, and managing assets worth over Rs 300 Crores of more than 1500 fauji investors as on today. Most of the officers know what is good for them and what is not, even when they may not themselves be very financially savvy.

Second reason for this opposition could be the limited financial knowledge of the people who are opposing it, wherein they are working on absolute figures in dealing with long term money rather than bringing it down to a common percentage factor, as is done for easy comparison of products. They could also be pushing their argument just to justify a stand they’ve already taken. This is being done by brandishing absolute figures to make the situation look alarming – one such article says that, out of the balance Rs 98 lacs due to an officer, the govt pays only Rs 54 Lakhs upfront on retirement and retains the balance Rs 44 Lakhs. Please remember that if you have taken a loan of Rs 54 Lakhs from any agency at 8.6% for 15 years in the normal course, you would have paid the lender a total of Rs 98 Lakhs, which is Rs 44 Lakhs extra. There is nothing extraordinary about it and all of us have been doing it all our life when we take a loan. And normal loans do not come with the sweetners coming with pension commutation which I’ve already written about earlier in this article. And the loans do not automatically come with life insurance too.

Also be aware that the cheapest rate at which vehicle loans are today being given by banks like SBI is 9.25% and the personal loans are at least at 12.5%. Large number of officers take such loans routinely. Thus to say that this loan (ie, commutation of pension) is bad just because the lender (Govt in this case) takes its part of the interest, is a very naïve  argument. Probably the people opposing it have the mentality – ‘Oh! How can the Govt earn any rate of interest from its citizens? Govt is always meant to give free lunches!’. Don’t forget that your various loans from AGIF/AFGIS/NGIS come at similar or higher rates of interest.

*Finally our Recommendations repeated yet again*

We strongly recommend that all officers should commute their pension to the maximum allowed 50%. If the officers are also able to invest their commuted pension bulk amount wisely and carefully, there is not likely to be any difference in their take-home pension even after commutation while still having this large commuted amount with them as an additional reserve.

Positive Energy

HOW TO INCREASE
POSITIVE ENERGY
IN OUR HOUSE.....

1) Open all windows in the house and allow fresh air and sunshine to enter the house. Free flowing air and sun are negative energy removers

2. Dispose of all the old unwanted things lying in the house. Clutter is a negativity magnet. It attracts and accumulates negative energy in the house.

3). Walking barefoot in the house helps all your negative energy to be absorbed by the earth.
Grounding is important to keep the energy balance in our body.

4) In the olden days, footwears were kept out of the house. People used to enter the house only after washing feet with water. This action ensures that all the negativity remains outside or are grounded by earth and does not enter the house. Now it has become difficult to keep the footwear outside. So preferably remove them near the entrance door.

5) Go out in the open air. Take walks in the garden or open ground. Being amongst nature re-energizes or charges you fully.

6) Sweeping the floor also ensures that the negative energies are shaken and moved out with the dirt.

7)  Rock salt is another negativity remover. Wash or mop your floor with a fistful rock salt in a bucket of water. This ensures that every nook and corner of the house is rid of negative energy.

8) Potted plants or trees around your house or society also ensures more positive energy in the house and area.

9) Bathing or Soaking your legs and hands in rock salt water once in a while removes the negativity attached to your body and cleanse your aura.

11)   Repetition of Prayers,  increases the positive vibrations in the house. 100%

11)  Keep your thoughts, action and speech Positive. Negative thoughts will bring in negative vibes. So avoid all negative thoughts, speech and actions.

12) Keep your house well lit and illuminated. Light removes negativity.

13) Keep faith in God and in yourself.
You are the Creator of your own destiny by the Choices you make.

STAY HAPPY
STAY BLESSED

Affirmations

Louse Hey' s affirmations -
Every early morn and at bed time to be read , rehearsed , memorized and implanted in each cell of our being... -

1.) I am the architect of my life; I build its foundation and choose its contents.

2.) Today, I am brimming with energy and overflowing with joy.

3.) My body is healthy; my mind is brilliant; my soul is tranquil.

4.) I am superior to negative thoughts and low actions.

5.) I have been given endless talents which I begin to utilize today.

6.) I forgive those who have harmed me in my past and peacefully detach from them.

7.) A river of compassion washes away my anger and replaces it with love.

8.) I am guided in my every step by Spirit who leads me towards what I must know and do.

9.) (If you’re married) My marriage is becoming stronger, deeper, and more stable each day.

10.) I possess the qualities needed to be extremely successful.

11.) (For business owners) My business is growing, expanding, and thriving.

12.) Creative energy surges through me and leads me to new and brilliant ideas.

13.) Happiness is a choice. I base my happiness on my own accomplishments and the blessings I’ve been given.

14.) My ability to conquer my challenges is limitless; my potential to succeed is infinite.

15.) (For those who are unemployed) I deserve to be employed and paid well for my time, efforts, and ideas. Each day, I am closer to finding the perfect job for me.

16.) I am courageous and I stand up for myself.

17.) My thoughts are filled with positivity and my life is plentiful with prosperity.

18.) Today, I abandon my old habits and take up new, more positive ones.

19.) Many people look up to me and recognize my worth; I am admired.

20.) I am blessed with an incredible family and wonderful friends.

21.) I acknowledge my own self-worth; my confidence is soaring.

22.) Everything that is happening now is happening for my ultimate good.

23.) I am a powerhouse; I am indestructible.

24.) Though these times are difficult, they are only a short phase of life.

25.) My future is an ideal projection of what I envision now.

26.) My efforts are being supported by the universe; my dreams manifest into reality before my eyes.

27.) (For those who are single) The perfect partner for me is coming into my life sooner than I expect.

28.) I radiate beauty, charm, and grace.

29.) I am conquering my illness; I am defeating it steadily each day.

30.) My obstacles are moving out of my way; my path is carved towards greatness.

31.) I wake up today with strength in my heart and clarity in my mind.

32.) My fears of tomorrow are simply melting away.

33.) I am at peace with all that has happened, is happening, and will happen.

34.) My nature is Divine; I am a spiritual being.

35.) My life is just beginning....

Bhagwat Gita facts

🔹Few facts of Bhagavad Gita  :

🚩What is the Bhagavad-Gita?

The Bhagavad-Gita is the eternal message of spiritual wisdom from ancient India. The word Gita means song and the word Bhagavad means God, often the Bhagavad-Gita is called the Song of God.

🚩Why is the Bhagavad-Gita called a song if it is spoken?

Because its rhyming meter is so beautifully harmonic and melodious when spoken perfectly.

🚩What is the name of this rhyming meter?

It is called Anustup and contains 32 syllables in each verse.

🚩Who originally spoke the Bhagavad-Gita?

Lord Krishna originally spoke the Bhagavad-Gita.

🚩Where was the Bhagavad-Gita originally spoken?

In India at the holy land of Kuruksetra.

🚩Why is the land of Kuruksetra so holy?

Because of benedictions given to King Kuru by Brahma that anyone dying in Kuruksetra while performing penance or while fighting in battle will be promoted directly to the heavenly planets.

🚩Where is the Bhagavad-Gita to be found?

In the monumental, historical epic Mahabharata written by Vedavyasa.

🚩What is the historical epic Mahabharta?

The Mahabharata is the most voluminous book the world has ever known. The Mahabharata covers the history of the earth from the time of creation in relation to India. Composed in 100,000 rhyming quatrain couplets the Mahabharata is seven times the size of the Illiad written by Homer.

🚩Who is Vedavyasa?

Vedavyasa is the divine saint and incarnation who authored the Srimad Bhagavatam, Vedanta Sutra, the 108 Puranas, composed and divided the Vedas into the Rik, Yajur, Artharva and Sama Vedas, and wrote the the great historical treatise Mahabharata known as the fifth Veda. His full name is Krishna Dvaipayana Vyasa and he was the son of sage Parasara and mother Satyavati.

🚩Why is the Mahabharata known as the fifth Veda?

Because it is revealed in the Vedic scripture Bhavisya Purana III.VII.II that the fifth Veda written by Vedavyasa is called the Mahabharata.

🚩What are the special characteristics of the Mahabharata?

The Mahabharata has no restrictions of qualification as to who can hear it or read it. Everyone regardless of caste or social position may hear or read it at any time. Vedavyasa wrote it with the view not to exclude all the people in the worlds who are outside of the Vedic culture. He himself has explained that the Mahabharata contains the essence of all the purports of the Vedas. This we see is true and it is also written in a very intriguing and dramatically narrative form.

🚩What about the Aryan invasion theory being the source of the Bhagavad-Gita?

The Aryan invasion theory has been proven in the 1990s not to have a shred of truth in it. Indologists the world over have realized that the Aryans are the Hindus themselves.

🚩What is the size of the Bhagavad-Gita?

The Bhagavad-Gita is composed of 700 Sanskrit verses contained within 18 chapters, divided into three sections each consisting of six chapters. They are Karma Yoga the yoga of actions. Bhakti Yoga the yoga of devotion and Jnana Yoga the yoga of knowledge.

🚩When was the Bhagavad-Gita spoken?

The Mahabharata confirms that Lord Krishna spoke the Bhagavad-Gita to Arjuna at the Battle of Kuruksetra in 3137 B.C.. According to specific astrological references in the Vedic scriptures, the year 3102 B.C. is the beginning of kali yuga which began 35 years after the battle 5000 years ago. If calculated accurately it goes to 5151years from today.

🚩What is the opinion of western scholars from ancient times?

According to the writings of both the Greek and the Romans such as Pliny, Arrian and Solinus as well as Megastathanes who wrote a history of ancient India and who was present as an eyewitness when Alexander the Great arrived in India in 326 B.C. was that before him were 154 kings who ruled back to 6777 B.C. This also follows the Vedic understanding.

🚩When was the Bhagavad-Gita first translated into English?

The first English edition of the Bhagavad-Gita was in 1785 by Charles Wilkins in London, England. This was only 174 years after the translation of the King James Bible in 1611.

🚩Was the Bhagavad-Gita also translated into other languages?

Yes. The Bhagavad-Gita was translated into Latin in 1823 by Schlegel. It was translated into German in 1826 by Von Humbolt. It was translated into French in 1846 by Lassens and it was translated into Greek in 1848 by Galanos to mention but a few.

🚩What was the original language of the Bhagavad-Gita?

The original language of the Bhagavad-Gita was classical Sanskrit from India.

🚩Why is Srimad often written before the Bhagavad-Gita?
The word Srimad is a title of great respect. This is given because the Bhagavad-Gita reveals the essence of all spiritual knowledge.

🚩Is history aware of the greatness of Srimad Bhagavad-Gita?

Historically many very extraordinary people such as Albert Einsten, Mahatma Gandhi, Dr. Albert Schweitzer, Herman Hesse, Ralph Waldo Emerson, Aldous Huxley, Rudolph Steiner and Nikola Tesla to name but a few have read Srimad Bhagavad-Gita and were inspired by its timeless wisdom.

🚩What can be learned by the study of Srimad Bhagavad-Gita?

Accurate, fundamental knowledge about God, the ultimate truth, creation, birth and death, the results of actions, the eternal soul, liberation and the purpose as well as the goal of human existence.

Happiness tip

Did you know that at Harvard, one of the most prestigious universities in the world, the most popular and successful course teaches you how to learn to be happier?

The Positive Psychology class taught by Ben Shahar attracts 1400 students per semester and 20% of Harvard graduates take this elective course. According to Ben Shahar, the class - which focuses on happiness, self-esteem and motivation - gives students the tools to succeed and face life with more joy.This 35-year-old teacher, considered by some to be "the happiness guru", highlights in his class 14 key tips for improving the quality of our personal status and contributing to a positive life:

🚩Tip 1. * Thank God for everything you have: * Write down 10 things you have in your life that give you happiness. Focus on the good things!

🚩Tip 2. * Practice physical activity * Experts say exercising helps improve mood. 30 minutes of exercise is the best antidote against sadness and stress.

🚩Tip 3. * Breakfast: * Some people miss breakfast for lack of time or not to get fat. Studies show that breakfast gives you energy, helps you think and perform your activities successfully.

🚩Tip 4. * Assertive *: Ask what you want and say what you think. Being assertive helps improve your self-esteem. Being left and remaining silent creates sadness and hopelessness.

🚩Tip 5. * Spend your money on experiences..a study found that 75% of people felt happier when they invested their money in travel, courses and classes; While only the rest said they felt happier when buying things.

🚩Tip 6. * Face your challenges *: Studies show that the more you postpone something, the more anxiety and tension you generate. Write short weekly lists of tasks and complete them.

🚩Tip 7. * Put everywhere nice memories, phrases and photos of your loved ones *: Fill your fridge, your computer, your desk, your room, YOUR LIFE of beautiful memories.

🚩Tip 8. * Always greet and be nice to other people *: More than 100 inquiries state that just smiling changes the mood.

🚩Tip 9. * Wear comfortable shoes *: If your feet hurt you, you become moody, says Dr. Keinth Wapner, President of the American Orthopedics Association.

🚩Tip 10. * Take care of your posture *: Walk straight with your shoulders slightly backwards and the front view helps to maintain a good mood.

🚩Tip 11. * Listen to music * (Praise God): It is proven that listening to music awakens you to sing, this will make your life happy.

🚩Tip 12. * What you eat has an impact on your mood *:- Do not skip meals, eat lightly every 3 to 4 hours and keep glucose levels stable.- Avoid excess white flour and sugar.- Eat everything! Healthy- Vary your food.

🚩Tip 13. * Take care of yourself and feel attractive *:70% of people say they feel happier when they think they look good.

🚩Tip 14. * Fervently believe in God *: With him nothing is impossible! Happiness is like a remote control, we lose it every time, we go crazy looking for it and many times without knowing it, we are sitting on top of it ...

Advisory on LTC Advance

This is an advisory on LTC Advance

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Travel Tip : Coin in freezer

HERE’S WHY YOU SHOULD LEAVE A COIN IN THE FREEZER, EVERY TIME BEFORE YOU LEAVE THE HOUSE. AMAZING!

Well, have you ever came from work or some long trip and noticed that your digital clocks showing the wrong time?

You might think: “Certainly there was no power outage!”. Even if it was, you simply cannot know how long there was no electricity, right?

There is possibility that it was for several days, leading to defrost food and its deterioration. Once the electricity comes back, foods freeze again and you almost do not notice that they were thawed.

It is fact that this can be really dangerous as certain types of foods are at risk of spreading salmonella and other bacteria!

Below we are going to present you a way to find out if and how long your freezer was without electricity!

Now you can find out if you can consume the food or it was too long being in warm.

For this you need:

• a cup
• a coin
• water

First pour water into a cup and place it in the freezer. When the water in the cup is frozen, put a coin on top of the frozen water in the cup and then return it to the freezer.

After returning home from holiday, before taking out the food from the freezer, look at where the coin is!

If the coin is still at the top or in the middle of the cup, there was no power failure or power outage was for a short time, so the water was only partly melted.

If the coin is at the bottom of a cup, it means that electricity failure was for a long time, so the water completely dissolved, and the coin sinks all the way to the bottom of the cup. At that point, it is advisable not to consume the foods from the freezer.

Brilliant trick which is supereasy to use. This is particularly useful when you go on longer trips!