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Retirement Planning: Retirement planning is no longer limited to mere saving. Given rising life expectancy, inflation, and healthcare costs, it has become essential to build a substantial retirement fund well in advance. Salaried individuals benefit from the EPF (Employees' Provident Fund). However, several other government-backed and market-linked schemes can provide a source of regular income post-retirement.

NPS (National Pension System)

NPS is a government retirement scheme regulated by the PFRDA. Both salaried employees and self-employed individuals can invest in it.

Funds are invested in equity, corporate bonds, government bonds, and other assets. Upon retirement, a portion of the corpus can be withdrawn as a lump sum, while the remaining amount is used to purchase an annuity, which provides a monthly pension. It also offers tax benefits.

EPF (Employees' Provident Fund)

EPF is the most popular retirement scheme for employees in the organized sector. Every month, both the employee and the employer contribute a fixed portion of the basic salary and Dearness Allowance (DA).

The EPFO ​​determines the interest rate annually; currently, it stands at 8.25% per annum. The entire fund can be withdrawn upon retirement. However, partial withdrawals are also permitted—subject to certain conditions—for needs such as medical treatment, purchasing a home, or education.

PPF (Public Provident Fund)

PPF is a government-backed long-term savings scheme. It has a maturity period of 15 years, which can be extended in blocks of five years.

The interest rate is determined by the government, and returns are unaffected by market fluctuations. It offers tax benefits and is considered an excellent option for building a secure retirement fund over the long term.

APY (Atal Pension Yojana)

Atal Pension Yojana was primarily launched for individuals in the unorganized sector. However, others who meet the eligibility criteria can also join the scheme.

It requires regular investment during one's working years. Upon reaching a specified age, the subscriber receives a guaranteed monthly pension. The pension amount depends on your contributions and the chosen option.

SCSS (Senior Citizens' Savings Scheme)

The SCSS is designed specifically for retirees. Investments can be made through banks and post offices.

The government determines the interest rate periodically. Interest is paid at regular intervals, making it a popular choice among those seeking a steady income after retirement.

Mutual Funds

Apart from government schemes, mutual funds can also be a good option for building a retirement corpus. Equity mutual funds have the potential to deliver superior returns over the long term; however, they do carry market risk.

Investing monthly via SIPs allows you to benefit from the power of compounding over time. As retirement approaches, many investors shift towards stable options like debt funds, which carry lower risk.

Which scheme should you choose?

A single retirement plan may not be suitable for everyone. The right choice depends on factors such as your age, income, employment, risk appetite, and retirement goals. Financial advisors generally recommend against relying on just one scheme; instead, they suggest diversifying investments across different schemes to minimize risk.

For instance, the EPF can serve as a foundation for salaried individuals, while the NPS, PPF, and mutual funds can help build an additional retirement corpus. Post-retirement, schemes like the SCSS can provide a reliable source of regular income.