No salary, no problem: These schemes can help you save for a retirement pension even when unemployed

Retirement schemes are generally associated with salaried individuals having stable jobs and monthly salaries. However, these days, even self-employed individuals can also plan and save for their retirement pension with the help of various retirement savings options.

This article explores retirement savings schemes that can be accessed even by non-salaried persons.

Retirement saving options for non-salaried individuals 

National Pension System (NPS) is a government-backed scheme for retirement planning. Under NPS, subscribers can make regular contributions during their working life to build a retirement corpus, which can be later used to generate a steady pension.

NPS is a market-linked investment option where returns depend on the performance of the investments made by the pension fund managers and the investment option selected by the subscriber.

NPS allows individuals to withdraw a part of their corpus (up to 60%) upon retirement, while the rest of it is required to be used to purchase an annuity.

The scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It is open to all Indian citizens (aged 18–70), including employees in the private sector and self-employed persons.

This is a voluntary and contributory pension scheme offered by the Ministry of Labour and Employment under NPS. The scheme is meant for retirement planning and social security of small-scale traders and retailers. It provides a guaranteed pension of ₹3,000 per month after the age of 60. In this scheme, subscribers contribute a small amount monthly based on their age, and the government makes a matching contribution.

• Should be a retail trader/shopkeeper or a self-employed person
• Entry age must be between 18 and 40 years
• Annual turnover should be below ₹1.5 crore

Non-salaried persons can use various mutual fund schemes to save and invest for their retirement. These schemes offer diversification, professional management by qualified fund managers, and long-term growth options. Over time, reinvested earnings (dividends and capital gains) from these funds can boost your retirement savings.

With low minimum investment requirements, mutual funds are accessible to a wide range of investors. There are different categories of mutual funds that can be used to plan for retirement based on an investor’s risk appetite and financial goals in life.

You may also explore various retirement funds, which are solution-oriented mutual fund schemes for retirement goals.

However, selecting the right set of mutual fund schemes is often difficult for many investors. If you are also facing this problem, then you should consult a financial advisor.

APY is primarily for persons in lower-income groups. With guaranteed pensions ranging from ₹1,000 to ₹5,000 per month after the individual turns 60, the scheme is affordable and government-backed, making it a reliable option.

The subscribers are required to contribute the prescribed contribution amount from the age of joining APY till the age of 60 years. Further, subscriber contribution shall be made through the facility of ‘auto-debit’ of the prescribed contribution amount from the savings bank account of the subscriber on a monthly, quarterly or half-yearly basis.

• Entry age must be between 18 and 40 years.
• The age of exit and start of pension is 60 years.

PPF is a secure and long-term savings instrument, and its tax-free interest makes it an ideal option for investors to build wealth and plan for retirement. Anyone who wants to invest in PPF can start with a minimum investment of ₹500.

However, the maximum amount that one can invest and claim tax deduction under section 80C is ₹1.5 lakh per year. This deduction is available only under the old tax regime.

PPF offers a 15-year lock-in period and optional extensions, which makes it a low-risk plan for a self-employed individual. You may use the maturity proceeds from the PPF account to buy an annuity plan after retirement or invest in schemes that will pay back returns at regular intervals for your day-to-day needs.