No more retirement worries! build ₹1 crore fund with PPF without risk, get ₹61,500 monthly pension
New Delhi (The Uttam Hindu): Financial security after retirement is a common concern. Many people look at market-linked options, but those involve risk. For individuals seeking a safe and stable income source, the government-backed Public Provident Fund (PPF) offers a long-term solution. With disciplined investment over time, this scheme can help build a corpus of over ₹1 crore and generate steady, tax-free income after retirement while keeping the principal amount secure.
Why PPF is considered a safe option
The Public Provident Fund is one of India’s most trusted long-term savings schemes. It is backed by the Government of India, making it a secure investment option. Under Section 80C of the Income Tax Act (old tax regime), investors can claim tax benefits on their contributions, and the maturity amount is completely tax-free.
Currently, the interest rate stands at 7.1 percent per annum, reviewed quarterly by the government. Although rates are lower compared to the 1990s and early 2000s, the tax-free returns continue to make PPF attractive compared to other fixed-income instruments.
Key rules for investment and account operation
An individual can invest a minimum of ₹500 and a maximum of ₹1.5 lakh in a financial year. The lock-in period for a PPF account is 15 years. After maturity, the account can be extended in blocks of five years, with or without further contributions.
If an investor wishes to continue contributing after 15 years, Form H must be submitted within one year of maturity. Interest is calculated monthly on the lowest balance after the 5th of each month and compounded annually at the end of the financial year.
How ₹1 crore corpus can be created
If an investor deposits the maximum ₹1.5 lakh every year and the interest rate remains at 7.1 percent:
After 15 years, the corpus will be approximately ₹40.68 lakh.
After extending for another 5 years (20 years total), it will grow to around ₹66.58 lakh.
After a further 5-year extension (25 years total), the total corpus will reach approximately ₹1.04 crore.
By continuing investment for 25 years, the ₹1 crore target can be achieved through consistent contributions and compounding.
Monthly income of ₹61,500 explained
If the ₹1.04 crore corpus remains invested at 7.1 percent interest without further contributions, it will generate approximately ₹7.38 lakh annually as interest. Divided monthly, this equals around ₹61,533 per month.
Importantly, this monthly amount comes from interest earnings alone, while the principal amount of ₹1.04 crore remains intact in the account.
Important points for retirement planning
This strategy works effectively because the capital remains protected, the income is stable, and maturity proceeds are tax-free. The long duration allows compounding to significantly increase the total corpus.
A PPF account can be opened at a bank or post office, and the rules and returns remain the same at both places. However, investors must remember that the annual investment limit of ₹1.5 lakh cannot be exceeded. Additionally, over a long period of 25 years, interest rates may change, and inflation may affect the real value of future income. Careful planning and disciplined investing are essential.