Pension Plans in India: The way inflation is rising, we have to start planning for our retirement from the very beginning. If you have not done retirement planning yet, then you can start it in the new year. In law, we should start planning for old age as soon as we step into professional life. Because people working in the private sector rarely think about retirement.
If you are employed and have an account in EPFO, then with a good planning you can prepare a great retirement plan. Employees’ Provident Fund Organizations invest some part of their salary in EPF to their account holders. EPS i.e. Employees’ Pension Scheme is linked with EPFO.
Employees’ Pension Scheme
Employees’ Pension Scheme (EPS) is a retirement scheme, which is managed by EPFO. This scheme is for the retired employees who have worked in the organized sector, who have retired at the age of 58 years. When you start working in a company or institution, your EPS account is also opened along with the PF account. Therefore, by managing PF and EPS accounts in the right way, you can live a life of luxury in old age.
Make such investments
If you start a job at the age of 25 and your basic salary is Rs 20,000 per month, then you can accumulate a good corpus for retirement without much effort. Because the EPF portion is deposited from the basic salary itself. The EPF consists of 12 percent of the employee and 12 percent of the employer. That is, 24 percent of your basic salary is deposited in your PF account every month. And if your basic salary is Rs 20,000, then at the rate of 24 percent, Rs 4800 will be deposited in your PF account every month. And in a year, Rs 57,600 will be deposited in your account.
Prepare Retirement Fund
Investments made in EPF at the right time become a fund of crores of rupees after a long gap. You get 8.5% interest while investing in EPF. If the age to start investing is 25 years and the basic salary is 20 thousand, then you can get Rs 2.79 crore at the time of retirement.
Keep in mind these things
that the money deposited in PF can make you a millionaire only if you do not withdraw it under any circumstances before the end of the time. Do not withdraw money from EPF unless there is some very important work or emergency, because withdrawing money will reduce your savings.
Also, keep in mind that on changing jobs, you must get your PF account transferred to the new company. If the account is not transferred, interest will be available on the new account, but after 3 years the interest on the old account will stop.
