Other retirement vehicles
In this chapter: EPF, PPF, superannuation, gratuity · Corporate-structure pension plans
EPF: mandatory 12% employee + 12% employer for formal-sector firms with 20+ employees. EEE (Exempt-Exempt-Exempt) tax. PPF: voluntary, ₹1.5 lakh/year cap, 15-year tenure (extendable in 5-year blocks), EEE tax. Superannuation: optional employer-funded scheme. Gratuity: lump sum at retirement (minimum 5 years service, formula-based).
EPF: contribution rate is 12% of basic + DA. EPS (a portion of employer contribution) provides a small monthly pension after retirement (capped at ₹7500/month historically; pending higher-pension cases ongoing). EPF withdrawal at retirement is tax-free. PPF: ₹1.5 lakh annual cap, 7-7.5% current rate (revised quarterly), 15-year initial tenure with extensions in 5-year blocks. Withdrawals after 7th year (partial) and full at maturity, tax-free. Superannuation: employer-funded, vesting rules vary; some lump sum + commutation rules apply at retirement. Gratuity: 15 days of last drawn salary per year of service, capped at ₹20 lakh tax-free.
A subtle insight: EPF's 8.15% (FY 2023-24) tax-free return is the best risk-adjusted return in India for salaried employees — it beats every debt mutual fund net of taxes. Voluntary EPF (VPF) — additional voluntary contribution above 12% — is the simplest debt allocation for tax-savvy salaried individuals. Note: VPF interest above ₹2.5L per year is now taxable (post-2021 amendment), so super-high-income earners are capped. RIAs should help clients optimise the EPF/VPF balance.