Higher EPS Pension: Can EPFO pay Higher Pensions or will it go bust?

Almost every EPF member who was part of the EPFO before Sep 1st 2014 has one or all these questions on their minds: Will I get higher EPS pension? Am I eligible for it if I am already retired? How much will my EPS pension increase? I can answer, the “am I eligible” question accurately (see circular below). I answered the “how much will it increase?” question last week and this week, let us consider a far more important question: Can the EPFO manage to pay the higher pensions? Let us first understand that it is not as simple as “the government will step in and make up the shortfall if any”. read more

Revised EPS Pension Calculator: How much will my EPS Pension increase?

Find out how much your EPS pension will increase with this Excel calculator if you contribute 8.33% of your full salary (basic +DA) instead of Rs. 1250 per month which is 8.33% of Rs. 15,000 the current salary ceiling mandated by the EPFO. Last week, a 1200%  hike in pension for Mr. Praveen Kohli following an October 2016 Supreme court judgement raised eyebrows. When I suggested not to increase EPS Contributions for higher Pension as it may mess up your retirement, many readers promptly ignored it and wanted to know if they are eligible for the pension increase and how much would their revised EPS pension be. read more

Do not increase EPS Contributions for higher Pension! It may mess up your retirement!

The employee pension scheme (EPS) is a component of the employee provident fund that provides a pension to its subscribers. Yesterday, news about how Mr. Praveen Kohli got a 1200% hike in pension created a stir. This was because, in October 2016, the Supreme Court directed the EPFO to increase the pension of 12 petitioners as per a 1996 amendment that should have increased their EPS contributions. In this post, I discuss what this increase in EPS contribution is all about and why you should not increase EPS contribution in the hope of getting higher pension during retirement. It will affect your ability to handle inflation in expenses. read more

Can I Retire With Rs. One Crore Today?

Suppose we have Rs. one Crore with us today, can we retire with it? In this sneak preview of the freefincal Robo advisory template* let us punch some numbers in it and check what good is Rs. 1 Crore.

  • The template is free and open-source and will be released soon. It is currently being beta-tested by members of FB group, Asan Ideas for Wealth.

One Crore is a psychological or emotional benchmark for wealth. Financially it is just one followed by seven zeros with its value constantly eroded by inflation. That said, it is still a good chunk of money as we shall see below. read more

Why have we not seen a retirement crisis in India?

In this post, I discuss reader Abhay Deol’s question: As anyone who has played with a retirement calculator knows, the corpus required for the retirement portfolio is huge. And from all accounts, most Indians are not prepared for it or even realize the huge amount required. What I’m curious about though is why hasn’t this crisis played out yet? Where are today’s retired professionals getting their monthly income from? read more