Pension

Retirement

A pension is a regular income stream in retirement. India has multiple pension sources: NPS (market-linked), EPF pension (EPS), annuity from insurance companies, SCSS (Senior Citizen Savings Scheme), and PM Vaya Vandana Yojana (for seniors).

In detail

EPS (Employee Pension Scheme): Rs 1,250/month employer contribution into pension pool. Pension formula: Pension = (Pensionable salary x Pensionable service) / 70. Maximum pensionable salary: Rs 15,000/month. Maximum EPS pension for 35 years service: Rs 7,500/month -- very low, inadequate alone.nnSCSS: senior citizens can invest up to Rs 30L at 8.2% quarterly interest. PMVVY: LIC pension scheme for 60+ at 7.4% for 10 years. Both offer guaranteed income but limited amounts.

Formula

EPS pension = (Pensionable salary x Pensionable service) / 70nAt Rs 15,000 salary and 35 years: Rs 15,000 x 35 / 70 = Rs 7,500/month

Real-life example

🇮🇳 India example

Arun retires at 60 with: EPS pension Rs 7,500/month + NPS annuity Rs 18,000/month + PPF SWP Rs 12,000/month + SCSS Rs 20,000/month = Rs 57,500/month total. Inflation-adjusted expenses at 60: Rs 55,000. Pension income covers expenses with small buffer.

Frequently asked questions

Is EPF pension (EPS) sufficient for retirement? ▼

No. Maximum EPS pension is Rs 7,500/month -- far below any realistic retirement expense. EPS should be considered a small bonus, not a retirement plan. NPS, PPF, and systematic equity investing are essential supplements.