Hi.I am a Defence Pensioner.Oflate,the OROP-2 arrears are being paidout periodically.Is there any gain if the stipulated amounts are split in previous FYs 2019 -2023 as suggested through Form 10E?

Ans: In table A of Form 10E you have the option to show details of arrears and calculate relief u/s 89(1). In table A, taxpayers can show the difference between the amount of arrears and total income as relief by filing Form 10E before filing Income Tax Return.

Ans: Hi Naresh
This may depend on the year in which the Full & Final settlement calculation is done by your employer. If it is done in the FY 2023-24 and the Form 16 is issued in this year then you could claim the enhanced deduction limit

Ans: No, under new regime u/s 115BAC only specified deduction are allowed from Chapter VI A [i.e. 80CCD(2), 80CCH(2), 80JJAA]

Ans: Evaluating Pension on Higher Wages vs. Alternative Investments
Understanding Your Pension on Higher Wages
First, congratulations on your upcoming retirement! Opting for "Pension on higher wages" with EPFO means you will receive a monthly pension of about Rs. 32,000. This amount will be a steady source of income. However, you need to pay Rs. 11 lacs in arrears to the pension fund. After your death, your spouse will receive half the pension, and there will be no return of the Rs. 11 lacs.

Assessing the Risks and Benefits
Pros:

Steady Income: You receive a guaranteed monthly pension, which provides financial stability.
No Market Risk: Your pension amount is not affected by market fluctuations.
Spousal Benefit: After your death, your spouse will receive half the pension, ensuring some continued support.
Cons:

Arrears Payment: You need to pay Rs. 11 lacs upfront, which is a significant amount.
Limited Return: After both you and your spouse pass away, the Rs. 11 lacs is not returned.
Inflation Risk: The pension amount is fixed, and inflation might reduce its purchasing power over time.
Exploring Alternative Investment Options
Investing Rs. 11 lacs elsewhere could potentially offer higher returns. Here are some alternatives:

Mutual Funds:

Actively Managed Funds: These funds have professional fund managers who actively make investment decisions. They can potentially outperform the market, offering higher returns.
Regular Plans via MFDs: Investing through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) credential can provide personalized advice and better fund management.
Fixed Deposits:

Low Risk: Fixed deposits are a safe investment option with guaranteed returns.
Flexibility: You can choose the tenure and amount of investment based on your needs.
Government Bonds:

Stable Returns: Government bonds offer stable and secure returns.
Interest Income: Bonds provide regular interest income, which can be a source of steady cash flow.
Comparative Analysis
When comparing the EPFO pension with alternative investments, consider these factors:

Risk Tolerance: EPFO pension offers low risk, while mutual funds can be volatile but potentially more rewarding.
Income Stability: EPFO pension provides a fixed monthly income, while investment returns can fluctuate.
Inflation Protection: Investments like mutual funds can potentially keep pace with inflation, unlike a fixed pension.
Personalized Strategy
Given your specific needs and risk tolerance, it might be beneficial to diversify your investments. Here are some suggestions:

Combination Approach: Consider allocating a portion of the Rs. 11 lacs to the EPFO pension and the rest to mutual funds and fixed deposits.
Professional Guidance: Seek advice from a Certified Financial Planner (CFP) to tailor a plan that aligns with your financial goals and retirement needs.
Empathy and Understanding
Your situation is unique, and it’s crucial to find a balance that offers security and growth. By exploring different options and understanding the pros and cons, you can make an informed decision. Remember, your financial well-being in retirement is paramount, and taking the time to plan carefully will pay off in the long run.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in