After retirement, you can receive a regular pension of ₹60,989 per month, entirely tax-free. That’s what we’re going to explain today. There’s a government-backed scheme called PPF, which can provide you with this setup, so keep reading to learn how.

The Public Provident Fund (PPF) account, also known as the Lok Pratyavandhi Nidhi account, is a familiar term for every salaried individual. Many Indians have already opened an account under the PPF scheme. Among the small savings schemes run by the Central Government, the PPF account is the most popular, offering an opportunity to save for the future while earning tax-free interest. If invested in consistently and with discipline, it can make you a millionaire by retirement. According to the Government of India, a PPF account can accumulate ₹2.27 crore over 35 years, making an investor a crorepati in just 25 years.

Where and how to open a PPF account?

First of all, let us know that any Indian can open an account in the very popular savings scheme PPF by going to any post office or any branch of any bank, in which the account holder has to deposit a minimum of ₹500 and a maximum of ₹1,50,000 during every financial year (1 April to 31 March).

No tax is ever levied on the EEE category scheme PPF.

It will be good to know the important and beneficial things about PPF, so remember, income tax exemption is available on the amount deposited every year in the PPF account, the interest you get every year in this account is also not taxable, and the entire amount received at the time of maturity also does not come under the purview of income tax.

How will a PPF account make you a millionaire in 25 years?

Here’s how you can arrange for a monthly pension of around ₹61,000 upon retirement with a PPF account. Suppose you are 35 years old and decide to open a PPF account at the start of this financial year, depositing ₹1,50,000. By March 31 of next year, ₹10,650 will be added to your PPF account as interest, thanks to the current PPF interest rate of 7.1% offered by the government. This will bring your account balance to ₹1,60,650 on April 1, 2025. If you make another deposit of ₹1,50,000 before April 5, the new financial year will start with ₹3,10,650 in your account.

By March 31, 2026, you would have earned an additional interest of ₹22,056, taking your balance to ₹3,32,706. The key is to deposit ₹1,50,000 every year between April 1 and April 5 to maximize the interest benefits.

Through disciplined, yearly deposits, after 15 years, your PPF account would mature with a total of ₹40,68,209. Out of this, ₹18,18,209 would be accumulated interest, while your principal investment over the years would total ₹22,50,000. Now extend the PPF account once again, and keep investing every year as before, because your journey of becoming a millionaire and earning a monthly pension of ₹61000 will just begin. This time after five years, when your PPF account matures, you will be 60 years old, and the total amount in your account will have crossed the figure of one crore. At that time, a total of ₹1,03,08,014 will be deposited in your PPF account, in which your investment would have been ₹37,50,000 and the government has added ₹65,58,015 to your account as interest.

How to arrange a monthly pension of ₹60989 from the PPF account?

Whenever you extend your PPF account, you have two options. One – Investment will continue after extension. Two – Investment will not be done after extension. Till now you have extended your account twice but did not stop investing, so the amount kept increasing very fast. But now after retirement, investing will not be easy and convenient, so now the time has come to get a pension without making a new investment.

Here are some important points to remember about your PPF account:

Quarterly Interest Rate Adjustment:

The interest rate on a PPF account is revised every quarter by the Central Government.
This means any increase or decrease in the interest rate will directly impact the total amount you receive upon retirement.

Maximizing Interest with Early April Investment:

To maximize your interest earnings, deposit your annual PPF investment within the first five days of April.
Doing this allows you to earn interest for the full year on your deposit.
Maturity Amount and Account Continuation:

The maturity amount mentioned in this example assumes that the PPF account has been consistently funded for 25 years.

If the investor is over 35 years old when opening the account, or does not extend the PPF account at least twice after the first 15-year term, the final maturity amount may be lower.

By keeping these factors in mind, you can make the most out of your PPF account and plan for a stable retirement.