Home > Money > Question
Need Expert Advice?Our Gurus Can Help
Ramalingam

Ramalingam Kalirajan  |5092 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - Feb 23, 2024Hindi
Listen
Money

I worked in Private company 1991 till 2007 after I stop working in india, since 2007 after me working in Abroad how much should I expect my pension amount after my age 55 as my Basic salary and D.A.that last period is as Basic 8510 and D.A 6051 .Pls can I know how much could I receive pension. At present date my age 53 now. Thanks

Ans: Estimating Your Pension Amount from EPS
Understanding Your Financial Journey
First, it's commendable that you are planning for your retirement. Knowing the specifics of your employment history helps in estimating your pension accurately. You worked in a private company in India from 1991 to 2007 and have been working abroad since then. Your last drawn basic salary was Rs. 8,510 and Dearness Allowance (D.A.) was Rs. 6,051.

Basics of Employee Pension Scheme (EPS)
Eligibility:

Service Period: Minimum of 10 years of service is required to be eligible for the pension.
Age: Pension starts at the age of 58, but you can opt for early pension at 55 with a reduced amount.

Pensionable Salary:

It is the average salary of the last 60 months before exiting the EPS scheme.
For simplicity, let’s assume your last drawn basic + D.A. as the pensionable salary, which is Rs. 14,561 (8510 + 6051).
Pensionable Service:

Your service period is from 1991 to 2007, which is 16 years.
Early Pension Reduction
If you opt for early pension at 55, there is a reduction of 4% per year before 58. So, if you start at 55, it’s a reduction of 12% in total.

Calculating Your Pension
Without Reduction (at age 58):
Monthly Pension =(14561×16 / 70)=Rs. 3,327

With Early Pension Reduction (at age 55):
12% reduction for starting 3 years early:

Reduced Pension=3327×0.88=Rs. 2,928

Factors to Consider
Inflation: The calculated amount may seem small due to inflation over the years.

Additional Savings: Consider building a supplementary retirement corpus through other investment avenues.

Current Employment: Check if your current employment abroad provides any pension benefits or savings plans.

Recommendations for Financial Security
Mutual Funds:

Equity Mutual Funds: Invest in equity mutual funds for long-term growth to supplement your pension.
Debt Funds: These provide stability and reduce overall portfolio risk.
Systematic Investment Plan (SIP):

Discipline: Start a SIP to ensure disciplined investing.
Diversification: Allocate investments across different mutual fund categories for risk mitigation.
Reassess LIC Policy:

Surrender: Consider surrendering any traditional LIC policies and reinvesting in higher-return mutual funds.
Term Insurance: Opt for term insurance for adequate life cover at a lower premium.
Emergency Fund:

Essential: Set aside 6-12 months’ worth of expenses in a liquid fund for emergencies.
Regular Review:

Monitor Investments: Periodically review and adjust your portfolio based on market conditions and personal circumstances.
Seek Professional Advice: Consult a Certified Financial Planner (CFP) to optimise your investment strategy.
Conclusion
With your pensionable service and the pension formula, your estimated pension amount at age 55 is approximately Rs. 2,928 per month. This amount is relatively modest, so it’s crucial to supplement it with additional savings and investments. By investing in mutual funds through SIPs, maintaining an emergency fund, and considering term insurance, you can build a secure financial future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |5092 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

Listen
Money
Hello Guruji, Query regarding pension amount I joined a MNC private company in 1993 and resigned in2015 , I got a pension certificate which says I will get a pension of ?6500 pm. Post that I went abroad for 4 years and returned in 2019. I joined an Indian company for 1 year till 2020 with a salary of ?4L pm basic salary + other allowances. Post that I joined an MNC for 3.5 years , which ended last month at a basic salary of ?4.5 L pm. How much pension amount can I expect and from when ? I am 53+ years of age. Will it be both combined or how ? Please help regards Abhi
Ans: Maximizing Pension Benefits: A Comprehensive Guide
Navigating pension benefits can be complex, but with strategic planning, you can optimize your retirement income. Let's delve into your situation and explore the potential pension amount you can expect.

Evaluating Pension Eligibility
Assessing Service Duration

Determine your total service duration with your previous employer from 1993 to 2015, spanning over 22 years.
Confirm the pension eligibility criteria based on your service duration with the company.
Understanding Pension Certificate

Review the pension certificate indicating a monthly pension of Rs. 6,500, provided upon your resignation in 2015.
Understand the terms and conditions outlined in the certificate regarding eligibility and payment structure.
Considering Post-Retirement Employment
International Employment

Take into account your employment abroad for four years, from 2015 to 2019, which may impact your pension entitlements.
Assess whether your international employment affects your eligibility or pension calculation.
Subsequent Indian Employment

Factor in your employment with an Indian company from 2019 to 2020, followed by a tenure with an MNC until last month.
Consider how your post-retirement employment affects your pension entitlements and calculations.
Determining Pension Amount
Combining Pension Entitlements

Combine the pension entitlement from your previous employment with the pension from your subsequent Indian employment.
Evaluate if the combined pension amount aligns with the terms specified in your pension certificate.
Calculating Pension

Calculate the total pension amount considering both periods of employment and their respective pension entitlements.
Verify if the calculated pension aligns with the pension certificate's stipulations and your service duration.
Seeking Clarifications and Guidance
Seeking Clarifications

Reach out to the pension authorities or your previous employer to clarify any doubts regarding your pension entitlements.
Request detailed explanations regarding the calculation methodology and factors influencing your pension amount.
Consulting a Certified Financial Planner (CFP)

Seek guidance from a Certified Financial Planner (CFP) specializing in retirement planning and pension benefits.
Receive expert advice on maximizing your pension entitlements and optimizing your retirement income.
Planning Ahead
Retirement Income Strategy

Develop a comprehensive retirement income strategy considering your pension entitlements, savings, and potential sources of income.
Ensure your retirement plan aligns with your financial goals, lifestyle preferences, and long-term objectives.
Regular Monitoring

Regularly monitor your pension account statements and retirement income sources to track your financial progress.
Stay informed about any updates or changes in pension regulations that may affect your retirement benefits.
Conclusion
By assessing your service duration, understanding your pension entitlements, and considering your post-retirement employment, you can determine the pension amount you can expect. Seeking clarifications, consulting with a CFP, and planning your retirement income strategy will empower you to make informed decisions and secure your financial future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Dr Nagarajan J S K

Dr Nagarajan J S K   |47 Answers  |Ask -

Health Science and Pharmaceutical Careers Expert - Answered on Jul 20, 2024

Dr Nagarajan J S K

Dr Nagarajan J S K   |47 Answers  |Ask -

Health Science and Pharmaceutical Careers Expert - Answered on Jul 20, 2024

Asked by Anonymous - Jul 18, 2024Hindi
Listen
Career
What is better to choose between vet or bpharm (I am a gen category student).According to my research I came to know that in today's market the bpharm graduates are not even considered as reputated pharmacists,after the degree too they get placements of 12k-15k per month only and growth even after a master's is not much. Whereas in vet gov vacancies are open but will everyone get the gov jobs ? Also in coming years what are the demands of these both fields and what is better to choose
Ans: Hi,
It seems there may be some misunderstanding and disappointment regarding the analysis of job opportunities in the pharmaceutical field. It's important to note that the pharmaceutical sector still holds promising prospects. However, it is essential for candidates to acquire in-depth knowledge. Completing a B.Pharm alone does not guarantee comprehensive expertise. It's essential to delve beyond the basic surface-level knowledge obtained during undergraduate studies. I'm unaware of your state of residence and the college where you pursued your B.Pharm.

Key locations with a strong pharmaceutical industry presence include Mumbai, Bengaluru, Hyderabad, and Ahmedabad. Chennai also has a few reputable pharmaceutical companies, albeit in limited numbers. It's crucial to consider your career choice rather than just a job. What is your preference: IT, Marketing/Sales, or Core Pharma? In IT, the remuneration is considerably higher in comparison to core pharmaceutical roles, but sustainability may be a concern. On the other hand, Sales/Marketing requires hard work but offers significantly better remuneration, e.g., INR 6-8L per annum. If the pharmaceutical industry is your preference, starting packages for fresh B. Pharm graduates typically range between INR 15,000 to 25,000.

Ultimately, the decision is yours to make. I wish you the best for your future endeavors.

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x