If you’re a salaried millennial in India, chances are you already feel pretty sorted about your retirement.
Every month, a portion of your salary quietly makes its way into the Employee Provident Fund (EPF) and Employee Pension Scheme (EPS). Maybe you also put away ₹1.5 lakhs a year into your Public Provident Fund (PPF) — because that’s what responsible adults do.
It feels safe.
It feels smart.
But here’s the hard truth: that feeling of safety might be the biggest illusion in your financial life.
The default Indian retirement system — EPF, EPS, and PPF — was designed for stability, not growth. In 2025, it’s no longer enough to secure the kind of retirement most millennials envision.
Let’s unpack why.
The Numbers Don’t Lie
Here’s what your so-called “safe” investments are earning today:
- EPF (FY 2024–25): 8.25%
- PPF: 7.1% (and unchanged for years)
Not bad — until you account for inflation.
The official CPI may sit at 3–4%, but your real inflation — the one that affects your lifestyle — looks very different:
- Medical inflation: 11–12%
- Education inflation: 10–12%
That means your 7–8% returns are barely keeping up, or in some cases, actually losing value over time.
Your EPF and PPF might keep your capital safe — but they won’t build a retirement corpus that can survive 30+ years of rising costs.
These instruments were designed to protect, not multiply.
The Pension Myth (The EPS Problem)
Here’s where it gets tricky. Many employees assume the “P” in EPF stands for a generous pension. It doesn’t.
Your pension actually comes from the Employee Pension Scheme (EPS) — which calculates benefits on a maximum salary cap of ₹15,000 per month (unless you’ve opted for the complex higher-pension process).
Even in the best-case scenario, after decades of service, the maximum EPS pension you can get is around ₹7,500 per month.
Now fast-forward 25 years. What will ₹7,500 even buy you?
A few lattes and a subscription or two.
That’s not a pension. It’s pocket change.
The 3-Part Modern Retirement Plan
If the traditional system won’t carry you through retirement, it’s time to evolve.
Here’s how you can future-proof your plan:
1. Reframe EPF and PPF
Think of them as the “safety” layer — the debt portion of your portfolio. They offer stability and predictability, but not growth. Keep them for balance, not as your main retirement engine.
2. Add the NPS Advantage
The National Pension System (NPS) is India’s most underrated retirement tool.
You get:
- An extra ₹50,000 tax deduction (Sec 80CCD(1B))
- Up to 75% allocation in equity, which allows your money to beat inflation over time
NPS gives you a blend of safety and growth — something EPF and PPF can’t.
3. Make Equity Your Growth Engine
The only asset class that has consistently beaten inflation in India is equity.
Regular mutual fund SIPs build long-term wealth through compounding, even with small, steady contributions.
Think of it this way:
Your EPF and PPF are the brakes — keeping you grounded.
Your equity SIPs are the engine — pushing you forward.
You need both to reach your retirement destination safely and on time.
The Bottom Line
Relying only on EPF, EPS, and PPF for retirement is like keeping your savings in a safety net — it might stop you from falling, but it won’t help you fly.
A truly strong retirement plan balances safety, tax efficiency, and growth.
That means blending your traditional savings with modern tools like NPS and equity SIPs to stay ahead of inflation and build lasting wealth.