RetirementFinancial Glossary
Pension
Definition
A regular income received after retirement, funded either by a defined benefit plan (government pension), a defined contribution plan (NPS, EPF), or an annuity purchased with retirement savings. Pension income is fully taxable as 'Income from Salary' or 'Income from Other Sources' depending on the source.
Why It Matters
India lacks a universal social security system, making pension planning a personal responsibility. Government employees receive defined benefit pensions (50% of last drawn salary). Private sector employees must build their own pension through NPS, EPF, and personal investments. Starting early is the single most effective pension strategy.