When you invest for your retirement through products such as the National Pension System (NPS) or a pension plan offered by life insurance companies, the product construct is such that at the end of the investment period—on your retirement—you take the accumulated corpus to buy an annuity. An annuity is a pension product that pays you regular income for life.
But what if at the time of retirement you need a lump sum? The good news is that these products allow you to take a portion of the accumulated money as lump sum. In financial parlance, this is called commuting. It basically means an upfront payment of your pension money.
