Relation of Inflation with Pension
When most people go to the grocery store to buy food or fill up their car with gas, they are probably thinking about inflation in the short term. Inflation not only affects consumer goods prices in the short term, but it must also be considered when planning for future costs.
Individually, the inflation rate influences how much your retirement savings will be worth. Inflation can seriously devalue your savings and income over time. Understanding how inflation may affect your retirement strategy is critical for ensuring that you have enough assets to last into your retirement years.
Over half of all retirees receive pensions, and 68% of retirees 65 and older receive pension benefits. Inflation has a negative impact on pensions in several ways.
First, pension plan benefits are typically tied to the employee's salary rates over the previous several years. If high inflation occurs during a retiree's final years of employment, their benefits may be reduced because they are partially based on pre-inflation salary figures. If inflation occurs after the retiree has stopped working, all of their benefits will be based on an outdated salary that may not reflect the current market rate for their previous job.
Second, pension benefits may or may not be inflation-adjusted. According to the National Association of State Retirement Administrators, 75% of state or local government pension plans provide some coverage for cost of living adjustments. In the meantime, private pension plans frequently do not provide cost-of-living adjustments. If a retiree relies solely on their pension income, their income source may be negatively impacted.
How can PensionBox help?
PensionBox’s AI predicts your investments future inclusive of 4% inflation. All the amount you save and set aside for retirement, is future projected inclusive of inflation.
Furthermore, PensionBox assists in providing you with a personalised retirement plan that keeps you in touch with your future self.
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PensionBox simplifies the National Pension System(NPS), the government's pension scheme for private employees both for retail users and HRs/companies.
If you don’t have an NPS account, you can simply open your pension account within 2 minutes and if you have NPS PRAN already, you will be able track, invest and manage everything free of charge with best user experience.
We never touch or hold your money directly, your investments go safely to your chosen pension fund through approved channels.
We are built with Zerodha as POP , ensuring transparency, data security, and peace of mind. Your retirement savings are protected by regulation and secured by technology.
That’s why, PensionBox brings transparency, zero charges, timely support and freedom to select any pension fund so that you get the best experience investing in NPS & be better future ready.
That’s not it, we help you & your company together to maximise contribution and tax savings with minimal charges & best user experience.
If you are an existing zerodha user then you get a fast login or sign up using kite ID.
Once you are onboarded with kite ID, you get free access to
- Open NPS in 2 minutes
- Track existing NPS
- POP shift or CRA shifting
- Invest in one time or create SIP in NPS
- Withdraw NPS requests & instant withdraw tier 2
- Create your dream retirement plan
- Open NPS Vatsalya for your kid
- Share with HR (To unlock more tax benefits)
- Employer Contribution:
- Contributions made by your employer to your NPS account are tax-free up to 14% of your basic salary under Section 80CCD(2). Do connect us with your HR to enable this for you.
Tax Benefits in Old Tax Regime - Self-Contribution:
- Deduction up to ₹1.5 lakh under Section 80C.
- Additional deduction of ₹50,000 under Section 80CCD(1B) — exclusive to NPS investments!
- This allows you to claim a total deduction of up to ₹2 lakh every year on your NPS contributions.
- Employer Contribution:
- Contributions made by your employer to your NPS account are tax-free up to 10% of your basic salary (Basic + DA) under Section 80CCD(2). Do connect us with your HR to enable this for you.
- This is over and above your personal deduction limits, giving you extra tax efficiency.
Feel free to book a free call to learn more about NPS, NPS Vatsalya, Corporate NPS & PensionBox or contact the support team.
