Learn about the various types of accounts that can help women save for their retirement.

Looking beyond EPF Other methods that let you save for retirement

Retirement planning is a long process. It should ideally start on the day you receive your first paycheck and continue until the day you hang up your boots. The procedure is not limited to saving money; it also entails different ways to invest funds and grow wealth over time in a way that beats inflation. If it ever becomes necessary to withdraw funds, this should be done in an optimised manner. 

The Employees’ Provident Fund (EPF) is one of the most popular and preferred means for retirement planning. It is offered to employees of an organisation with certain stipulations. However, not everyone is eligible for an EPF account, in which case you should opt for another method of retirement savings. But before we proceed, let us first understand what an EPF account is. 

The EPF account

EPF accounts are offered by the Employees’ Provident Fund Organisation (EPFO) of India. These are set up under the Employees' Provident Funds and Miscellaneous Provisions Act of 1952 and are designed for the purpose of retirement savings. The employee and employer both contribute the same amount towards the fund. The account matures on retirement and the employee is then allowed to withdraw the money.

EPF is mandatory for employees who draw salaries of less than Rs 15,000 per month. If you earn more, you can still apply for an EPF account voluntarily. As per the law, a company with 20 employees or more must register for the EPF scheme. The scheme is also available to companies with fewer employees, but it is not mandatory for them. 

If your workplace does not offer the option, here are some things you can do: 

1. Talk to your employer

If it is not compulsory for an employer with less than 20 employees to register under the EPF scheme, they may refuse to offer you an EPF account. In some cases, employers can make an exception and offer the facility if a majority of their employees put in a demand for EPF. Have a word with your colleagues; if a majority of them are in favour of an EPF, you can put forth the suggestion to your company’s management. 

2. Opt for other government schemes 

An EPF is not the only way to build a retirement corpus. There are many schemes and investment instruments that can help you secure your future. For instance, government schemes such as the Public Provident Fund (PPF) and National Pension Scheme (NPS) are good choices, especially for women. These are secure and offer a good rate of return over a long period of time. They are also easy to maintain, with low minimum contribution criteria that can suit anybody’s budget. 

Related: Types of pension plans and their tax benefits

3. Look for insurance-based retirement plans

Insurance products such as deferred and immediate annuity plans can guarantee a fixed stream of income for the rest of your life. You can also consider investing in a unit-linked investment plan (ULIP). Such plans offer the double benefit of investment and savings and are ideal for long-term goals. Lastly, an insurance plan with a life cover is another effective retirement plan. The life cover can provide security to your family in case of an unfavourable event, while the corpus at maturity can be used towards retirement expenses.

4. Open a systematic withdrawal plan (SWP)

A systematic withdrawal plan allows you to withdraw a specified sum of money from a mutual fund account. It offers many options such as withdrawing only the returns and gains, keeping your invested amount untouched. You can also choose how much you want to withdraw and how often. This is a great investment if you want systematic returns to meet your needs. 

Related: Avoid these mistakes when calculating your retirement corpus

5. Save in a fixed or recurring deposit

Fixed deposits and recurring deposits are two common savings options in India. These much-preferred methods offer a high level of security and risk-free returns. A fixed deposit also offers tax benefits. You can open a deposit at the same bank where you have your savings account and earn assured gains. 

6. Invest your money

Investing in stocks, mutual funds, and equities, can bring in high returns over a period of time. Although these investment instruments come with a fair share of risk, the returns too are higher than with other forms of savings. There is a short or no lock-in period in such options. However, these products require discipline and consistency and it is advisable to consult a professional in order to make better decisions. You can also use this retirement calculator to ascertain how much you should invest to reach your goals. 

Related: How to select a safe investment for retirement?

Last words

Retirement planning is an activity that requires careful planning and strategising. The process is important for everyone but even more so for women as it can provide them with dignity, security, and stability in old age. With efficient retirement planning, you can be independent all your life without having to depend on others to cover your basic needs and requirements. Therefore, it is essential to learn about all options available to you – apart from an EPF – and pick one that’s most suitable for your financial well-being. Read this to know how does a lower EPF contribution impact your retirement savings?

Disclaimer: This article is intended for general information purposes only and should not be construed as insurance or investment or tax or legal advice. You should separately obtain independent advice when making decisions in these areas.