Tension free retirement by PF

Provident Fund

Regular income and a health cover are of priority while you plan retirement. Indians are

known for saving more than 25% of their incomes but they invest in low return assets

(deposits @ 3.5% to 8%). Post tax, the yield is not enough to cover the loss of value due to

inflation over the years. There are various options available depending upon the risk profile and required fund flow of individual.The factors which generally impact the retirement corpus are - years to retirement, risk profile, inflation and tax liability on income earned as well as withdrawals. You can have complete tax free retirement life if planned with low risk. There might be investment where funds are coming at their own pace instead of the needs and you are paying tax thereon.

Employee provident fund (EPF): The employee share gets deducted from the salary

and equivalent amount is added by the employer. The amount is generally 12% of the basic salary plus DA. The returns are 8.5% p.a. Fixed, safe and its 100% tax free. The best part of EPF is that it gets invested before the salary reaches you. Hence, no more action is required, and thus there are no delays. It starts from the very beginning of your career and your employers are getting it doubled, without rating your performance. The returns are guaranteed by Govt. of India. Post tax returns are better than fixed deposits @ 12% in terms of safety too. The banks are offering up to 10% however corporate deposits can get 12% .

Public Provident Fund: You can deposit from ` 500 to ` 70000/- during the financial year. The

returns are 100% safe and tax free. PPF account can be opened in your spouse’s or child’s name also. The account is opened for a term of 15 years and it can be further extended for 5 years. This is the best investment for investors looking safe and steady returns. The investment of ` 70000/- p.a. for 15 years will help you to create a corpus of ` 20 lakh for your retirement.

Voluntary retirement or termination money isexempt up to ` 5 lakh. Money received up to ` 5 lakh at voluntary retirement or termination is exempt. You can take voluntary retirement benefit from multiple employers, but the tax-free amount is limited to ` 5 lakh. For claiming exemption

employee must have completed 10 years of service or 40 years of age. Tax-free amount paid

at voluntary retirement is limited to minimum of

1) 3 months of salary x number of completed year of service, or

2) Balance months left before retirement age x monthly emoluments at the time of retirement.   Vacancy caused by voluntary retirement should not be filled up by replacement. It should be

a reduction in workforce.

You can have complete

tax free retir