Elders in your family would always have thumb rules to share. “Of the rupee you earn, keep at least 25 paise for a rainy day” or “Save first and then spend”. In India, you can structure your retirement ideas in many ways. There is a ‘defined benefit’ way and a ‘defined contribution’ way. The ‘defined benefit’ schemes are plans like Public Provident Fund or Employees’ Provident Fund, government return on investment.
Currently, just about 10 per cent of the money in the NPS is invested in equity assets. However, Morgan Stanley, a global bank, expects this to go up to 25 per cent in a decade. It attributes this to recent regulatory changes aimed at allowing more allocation to equities than before. Private sector company employees can allocate a maximum of 75 per cent of their pension into equities, while for public sector enterprises, it is 50 per cent. The global bank expects India’s young workforce to contribute more towards retirement savings over the next decade.