Pension :

Concise Oxford Dictionary defines ‘pension‘ as a periodic payment made especially by Government or a company or other employers to the employee in consideration of past service payable after his retirement.

Commuted pension: Commutation means inter-change. Many persons convert their future right to receive pension into a lumpsum amount receivable immediately. For example, suppose a person is entitled to receive a pension of say Rs 2000 p.m. for the rest of his life. He may commute ¼th i.e., 25% of this amount and get a lumpsum of say Rs 30,000. After commutation, his pension will now be the balance 75% of Rs 2,000 p.m. = Rs 1,500 p.m.