What Is The Retirement Age In Private Sector in India?

retirement age In private sector in india

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Retirement planning starts from the very first salary that you receive in hand. Early financial preparation for retirement helps you save adequately for a worry-free life. Have you started retirement planning yet? If not, there is not to worry.

Start it today itself to get sufficient time for the same. For ease of planning, you should have a clear idea about the retirement age in the private sector. This will help you make investments to build a sumptuous retirement corpus within the remaining time.

Retirement Age for Private Sector Employees

The retirement age for private sector employees usually stays consistent throughout. However, there can be a slight change in the age for retirement that you should note. Accordingly, you can plan your retirement on time to stay financially independent even if there is no regular income source.

Here is a table depicting the retirement age for private company employees:

Private Sector

Retirement Age

IT Sector

60

Multinational Companies

60

Private Bank Chiefs

70

Banking Sector

60

Marketing Sector

Between 58 and 62

From this table, you can quickly determine when you will be retiring. However, you can also retire early before reaching the stipulated age. For this, you need to save adequately so you do not have to be financially dependent on others.

So, you can start planning for your retirement at the desired age from today. In addition to this, you can also receive several perks and benefits when retiring from private sector companies.

Benefits After Retirement from a Private Sector Company

Wondering what perks can you get after retirement in the private sector? Here are some of the notable benefits that you can reap:

Retirement Gratuity

This is a definite amount that every company provides you during your retirement. It serves as an appreciation for your contribution towards their company. However, it is mandatory to provide a continuous service of 5 years towards the company to be eligible to receive gratuity from the organisation.

You can easily calculate the gratuity amount before retirement using the following formula:

Gratuity = Basic + D.A. of last drawn salary x (15/26) x Number of years of service

Employees' Leave Encashment

You can encash your remaining leave balance and earned leaves to earn a substantial amount of money. You can use this amount for contributions towards various investment schemes to receive interest from them.

However, you should note that the maximum amount for this happens to be ₹25 Lakhs. Will you have to pay an additional tax on this amount? Well, for private sector employees, this amount is partly taxable and partly exempt as per Section 10(10AA)(ii).

Provident Fund Contributions

Periodic contributions to the EPF scheme when receiving your monthly salary ensures that you are left with sumptuous money when you retire. Some of the benefits available include a loan against PF, a home loan, free insurance, a partial withdrawal facility, etc.

Mainly there are two divisions in the EPF contributions, the employee and the employer. Females need to contribute 10% to 12% of their salary, whereas males need to contribute up to 8%. Employers must deposit up to 12% of the employee's salary to the EPF account.

A clear idea about these benefits is essential before you reach retirement age in the private sector. Knowing them can help you in making the most out of these benefits. For example, you will be able to know how many leaves to save for getting a tax-exempt leave encashment and so on.

FAQs About Retirement Age in the Private Sector

What is the right age to retire in the private sector?

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There is no right age to retire in the private sector. Employees have the flexibility to retire at the age of 60 or 62. Also, they can retire early if they do not wish to work further or keep working beyond 60 if they want.

Is the retirement age in the private sector gradually increasing?

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Yes, many companies are gradually increasing their employees' retirement age from 60 to 65. This ensures that the experienced employees keep serving their company till the young employees do not get enough experience.

When should private sector employees start planning for retirement?

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Ideally, private sector employees should start planning for their retirement in their early 20s. However, if you have not started yet, you can start your retirement planning today.

What is the minimum age for retiring in the private sector?

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There is no minimum age for retiring. You can take the decision of taking a retirement based on your lifestyle goals and financial capabilities. These factors ensure that you make the right decision.

What is the voluntary retirement scheme in the private sector?

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In the private sector, the employer offers voluntary retirement schemes to employees willing to end their service period before the age of 60 years. However, to be eligible for this, the employee must be above 40 and have worked at that company for over 10 years.

What is the retirement age for private employees in EPF?

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Employees in the private sector should have a retirement age of 58 years to receive the EPF pension. However, if they retire before this age, that is, between 50 and 57 years, they will receive a reduced pension.

Disclaimer

  • This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
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