new Delhi. At the beginning of the month, State Bank of India announced a Voluntary Retirement Scheme for its employees. This announcement is also similar to what was done by BSNL and MTNL. SBI employees who have been working for 25 years, or who have been 55 years old. They can adopt this scheme. According to experts, there may be reasons for taking VRS, which includes the employee’s performance and will. We tell you on what basis you decide to take VRS, what kind of expectations you have from VRS decision, and how to invest your money to secure the future.
what do you get?
What do you get when you opt for VRS? If we follow SBI as an example, then VRS payment is given equal to 50% of salary for the remaining period of the job. Which you are getting salary in last 18 months. If you have five years of service left and you get 1 lakh rupees a month, then for the remaining five years of service you will be given 30 lakh rupees. Along with VRS compensation, benefits like gratuity, pension and provident fund are also paid. Some companies have post-retirement medical cover, which is applicable even after opting for your VRS option. At SBI, pension is fixed on the basis of income slab and post at the time of retirement. VRS is offered to older employees, therefore, post-stay is usually held until retirement. However, the retirement policy of each company may vary. In such a situation, it is very important to check the conditions.
Need to evaluate
According to experts, it is quite important to evaluate by taking VRS, that the benefit in the retirement and earning during VRS. According to experts, it is very important to do the math on how many increments you will get in the rest of the service and how much money you will get from the bonus. Then compare his balance with VRS payment. If we take SBI as an example, then let’s assume that an employee of 50 years who has worked for 25 years in SBI. He is eligible to earn 10 more years now. If it adopts VRS, it will be paid for the next 10 years on the basis of 18 months salary. In such a situation, this scheme is not suitable for those who have more than 3 years of jobs left.
Take care of tax too
During VRS planning, they evaluate the benefits arising from it, but do not think about the tax on it. In such a situation, it is very important to do full calculus in your mind also about tax. As per Section 10 (10C) of the Income Tax Act, any compensation received under VRS is exempt from tax up to Rs 5 lakh. At the same time, more than 5 lakhs are taxed. The thing to keep in mind is that the discount is available only in the assessment year in which the year you are paid.
Plan your future
At present, there is an increase in the possible age, in such a situation, if you are not doing long term planning, then you may face problems like reduced income or closure. This question is arising because your retirement period will increase after VRS, which will require extra capital to complete. According to experts, the best option is to seek employment after taking VRS. In many cases, companies facing financial crisis or further development difficulties bring such VRS schemes. As such, it makes sense to select VRS and look for better opportunities. But in many cases, VRS comes with conditions such that an employee cannot apply for a job in another subsidiary company of the company or in another company of the same management or promoter. Another option is to start your own venture using the money you have obtained. Under which you can use part of the VRS fund as seed capital.
Make an emergency fund
You should create an emergency fund from the money received during VRS that can fully bear your 12 months expenses, which is equal to EMI, including insurance premiums and children’s school fees. In fact, due to the recession and the rising outbreak of Corona, the earning avenues are closing. In such a situation, there is a need for money on steps. According to experts, after VRS people who have a long time can spend a part of their money in learning new skills. Some portion can also be spent to repay expensive debts. The remaining amount can be invested in long term investment plans. On the other hand, those who have taken VRS few months before their retirement, then they should put some part of the VIS amount in the shares. This will increase earnings and will also help in tackling inflation. The remaining amount should be invested in various debt schemes so that regular income is available for monthly expenses.