To know more about Pension, click on the following link:
To know more about Gratuity, click on the following link:
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Every employee seeks and deserves to be looked after they complete a long term of service towards the industry and country’s economy. This is why, they receive retirement benefits in the form of a few schemes, so that they may be self sufficient and economically independent to live dignified lives. While a few schemes may require the employee to contribute in part along with the company, others are given completely by the organisation upon retirement. Pension and gratuity are two such retirement benefits.
The main aim among most people is to create a retirement nest egg, which today needs far more financial planning than just paying bills. In order to maintain your lifestyle the way you’ve always been living, it is important to have enough money after your retirement. You will find it difficult to manage your life with the sum you have in hand if you have not planned your retirement with the right investment schemes.
You will lose principal and interest if you withdraw your retirement savings today, and you can lose tax incentives or have to face withdrawal fines. Therefore, it is best not to touch on the savings reserved for retirement. Any employee needs to be compensated after completing a long time of service to the company and the economy of the country. This is why they are entitled to earn retirement payments so that they can remain self-sufficient and socially independent. Although a few programs enable the employee to pay in part to the firm, most are solely supported upon retirement by the entity. Such two other retirement perks are pension and gratuity.
What is Pension?
The term pension refers to a monthly installment paid to an employee upon retirement. It is a benefit provided by the employer that can be a government establishment or any other organisation to the ex-employee or his dependent relatives on a perpetual basis. Pension payments become effective for employees who have served the same organisation for at least 10 years. The amount of pension is decided taking into consideration the average emoluments of an employee, which could be either the last drawn salary or the average salary of 10 months preceding retirement, etc. Pension becomes payable upon the retirement, superannuation, death or disablement of an employee.
What is Gratuity?
Gratuity is the sum of money that an ex employee receives as a form of gratitude for his contribution towards the organisation. It is a form of social security benefit provided by the employer of an establishment to the retiring employee as a token of recognition when they retire or leave the organisation. To be eligible for gratuity, a person must complete at least 5 years of service at the same organisation. The 5 years of service condition is not applicable in the case of death or disablement of the employee as a result of an accident or disease. This is payable upon the retirement, superannuation, death or resignation of an employee. The amount of gratuity payable is given to the employee upon leaving the establishment but in case of death, is handed over to the nominee of the employee. If there is no nominee, the same is given to the legal heir in accordance of the law.
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