We received an interesting email from Mr Rangarajan a few days: “When I read your article about pension, I remembered my father’s situation. When he was an advocate earning Rs 1,000 per month in 1934, he joined judicial service on a payment of Rs 250 per month”. This is the financial journey (1923-1983) of a lawyer who retired as a judge and continued his practice for the next three decades.
“He rose to become a District Judge on a salary of Rs 1000 per month, and on retirement, in 1954, his pension was Rs 250 per month! The house he took on an installment purchase cost Rs 175 per month, and he had only Rs 75 for household expenses”.
“He was forced to start practice again and, fortunately, could make a decent living while spending his provident fund amount for celebrating his daughter’s marriage. A District Judge retiring thirty years later would be getting the present salary of that post which will be more than ten times his last drawn pay!”
We then sought more details, and Mr Rangarajan kindly provided the following account.
When you asked for details, I wondered if my memory was right and opened my father’s trunk and found his income tax file maintained from 1928. He was born on 27-02-1899 and started his practice in 1923.
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His father was a Vedic pundit in a remote village who sent his son to live in Masulipatnam with his uncle, who brought him up and educated him upto SSLC and turned him out. He got a ticket to Madras and met Annie Besant, who gave him a scholarship of Rs 5 per month on the condition that he joins Pachayyappa’s College, which he did.
A friend shared his hostel room, and another shared his mess ticket. When he finished his Intermediate, a rich businessman gave his daughter and educated him upto BA and BL.
Then he started his practice. His return for PYE 1933 shows a total income of Rs 4,821. His father-in-law lost his business and wanted him to get a secure job because he thought that profession was also equally risky.
So he applied and got selected as a District Munsiff in 1934, and the total income for the next year is reported as Rs 2,000, of which the salary is 1169 [about Rs 200 pm], and the rest is interest from FD.
His salary income for PYE 1954 was Rs. 14,266 [about 1,200 pm]. For the next year, Salary[pension] has been assessed at Rs 3,211 [about Rs 266 pm], and he was committed to paying monthly instalments of Rs 175 for the house he took from a Govt Co-Op Housing society.
He also needed to maintain his car to put up a brave front but could not afford a driver, and as he did not drive himself, I was the honorary driver. Therefore he was forced to resume practice, and fortunately, he got some old clients and friends to support him by getting him some cases.
His policy was never to borrow but save a little bit every month. He started investing in shares only after retirement. He also did not touch his savings. His provident fund amount was reserved for his daughter’s marriage in 1968.
In 1978 the pension went up to Rs 10,105, the Professional income was 11,895, the Dividends were 2,303, and interest was 6,278. He stopped the practice in 1984 after his heart attack and died in 1993. His pension at that time was 11,008 per annum.
There are probably two main reasons why people did not think of retirement planning at all in those days. First is that the family was run as a joint venture. Even if the head of the family retired or even became unable to do anything, the sons would take care as the earnings of all the members were pooled, and there was no idea of individuals saving for themselves.
Secondly, there was no idea of savings – only deferred expenditures such as buying jewellery for the daughter’s marriage. Also, there was no idea of passive income except possibly real estate. My father’s predicament was that I was still in college when he retired and could not supplement his pension. Even life insurance was a taboo subject.
Retirement planning was not known in those days. It was assumed that the sons would take over the task of running the house by that time and that pension could supplement their income, or maybe they innocently assumed that expenses would come down on retirement and they could live on the pension amount.
I got a job in 1968 at Rs 500 per month, which I dutifully gave to my mother. I joined the service in 1973 on a salary of Rs 1750 pm and had to live in a remote place but continued to maintain the payment to my mother till her death in 2009. When I retired, my salary was Rs 8000 per month; on retirement, my pension was Rs. 4000.
The flat I took on rent after leaving the govt accommodation was Rs 8000 per month, and I also had to earn some income from consultation to supplement that income, though I did have some accumulated savings. Today my pension is 20 times my last drawn pay, and I have stopped all professional activities.
My father did not make any planned investment while in service. It was possibly a hand-to-mouth existence as I remember that he had no money to buy me a cycle he had promised for passing SSLC. Only after retirement did he buy a few shares on the recommendation of his small savings advisor.
Initially, he bought only national savings certificates, but all were in his wife’s name. He even took term insurance in my name when I joined service and asked me to pay the monthly premium.
Today the focus is on the individual’s growth and goals, such as buying a car or a house. Of course, children’s education expenses are forbidding whereas we studied only in municipal schools.
Editors note: Today, we are fortunate to live at a time when our salaries are significantly higher. A lawyer or a retired judge does not have to live a hand-to-mouth existence and can invest some money regularly. We are standing on the shoulders of our parents and grandparents, who sacrificed so much for us to shine. The best way to respect their efforts is to strive for financial independence, invest enough for retirement, stay fit and healthy and aim to work for as long as possible. Do join me in thanking Mr Rangarajan for his time and effort sharing this fascinating account.
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