3 Major Pension Schemes in India
By Anupama Deshpande | Jan 01, 2019

It is very necessary to make retirement planning in order to lead a good life even after your retirement. It is specially required for those persons who are not provided with any pension plan by their employers. Many banks, Insurance Companies and other financial institutions offer pension schemes in India for retired persons.

Suggested reading Must-Know Aspects of EMI and Personal Loan Calculator

Outlined below 3 major pension schemes in India:

Launched on May 9, 2015, Atal Pension Yojana (APY) is a government-run pension scheme mainly focused on unorganised sector employees. Any Indian all citizens between 18 and 40 years of age can invest under APY.

Suggested reading How much Amount should you Borrow in Personal Loan?

This scheme offers guaranteed minimum pension of Rs.1,000, Rs. 2,000, Rs. 3,000, Rs. 4,000 or Rs.5,000 per month. Almost all major banks offer this scheme.

Tax benefit are available to the subscriber under Section 80CCD (1B) of the Income Tax Act towards the contributions made (maximum Rs 50,000 per year).

Atal Pension Yojana is open for any citizen in India who is either working in unorganized sector or not working at all.

National Pension Scheme (NPS) offers you the flexibility to design your own portfolio based on your preference. National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme.

Under NPS, a subscriber can contribute regularly in a pension account during his/ her working life. After retirement, he/ she can withdraw a part of the corpus in lump sum and use the remaining corpus to earn a regular income after retirement (pension). You can even defer withdrawing the lump sum amount in NPS until you are 70 years old.

An NPS Account can be opened by anyone in the age group of 18 to 65 years. It is a pension scheme that costs little but delivers more.

Except from government employees, all other NPS subscribers can select from 2 investment options offering allocation to different funds. These offers are Active Choice and Auto Choice.

NPS offers:

• Provides old age income
• Good and market based returns for long term
• Old age security coverage

Founded on March 4th, 1952 and headquartered in New Delhi, EPFO assists the Central Board in administering a compulsory contributory Provident Fund Scheme, a Pension Scheme and an Insurance Scheme for the workforce engaged in the organized sector in India.

Suggested reading Keys to Removing the Risk of not getting a Personal Loan without Documents

Employee's Provident Fund (EPF) is a retirement benefit scheme which is available to all salaried employees. Employees Provident Fund Organisation of India (EPFO) manages this fund.

Any company with over 20 employees is required by law to register with the EPFO and has to deduct EPF of its employees mandatorily.

If you are also a salaried employee of a company having over 20 employees, both you and your employer each need to contribute 12% of your basic salary plus dearness allowance into your EPF account. Your full 12% contribution will go towards EPF but only 3.67% of your employer's contribution will go towards your EPF and rest 8.33% will go towards Employee's Pension Scheme (EPS).