From climbing the ladder to changing professions, this second chapter explores how to take care of your finances as you grow your career. That’s because pensions, insurance and investments can protect your future – whatever new opportunities are on the horizon.
Climbing the ladder
Now that you are a few years into your career, you might be thinking about moving jobs and exploring what possibilities can be found at a new company. But in between applications and interviews, it’s worth taking a moment to consider what this means for your pension.
Even though it is optional, most companies in India are part of the Employee Provident Fund scheme. This government-backed and -operated pension scheme is tax-deductible on investment as well as tax-free on maturity. Under this scheme, your employer deducts a portion of your basic salary each month (8-12%) and adds another 12%, before investing the entire amount into the EPF scheme. This investment matures on retirement, though there are exceptions under which you can access a portion of the funds sooner.
Should you decide to leave your current company, the pension and the contributions that you and your employer have made still belong to you. If your new employer is also part of the EPF scheme, the Universal Account Number (UAN) is the only information your Human Resources team would need to manage the transfer.
If your new role comes with a higher wage, you might also consider increasing the contributions you make to the EPF scheme and, if you have one, your personal pension plan as there are tax benefits involved.
Going in a new direction
What if you're not just moving jobs, but changing careers? According to a survey1, a third of Indian professionals feel stagnant in their current career, with 57% saying they would consider career pivoting to work toward a more fulfilling career.
Retraining and re-skilling is a great way to prepare for a change of career, however reducing your working hours or taking time off in order to study can put a strain on your finances.
If you plan to stay with your employer but want to embark on professional development, it’s worth exploring what funds or loans might be available to you. Many large organizations today offer scholarships to promising employees.
If you do decide to change careers, it might mean initially moving to a lower salary. Being financially stable has a lot to do with how well you manage your money. You will need to draw up a realistic budget, to ensure you can keep up with day-to-day expenses and meet any unexpected costs.
It is also important to have savings and investments in place. It’s all about planning for financial milestones, whether it’s buying a house, retirement savings or costs of your children’s education. Take time to research and invest wisely in plans that make the most sense for your situation. For example, a life insurance and savings plan such as Future Generali New Assured Wealth Plan can offer you the security of life insurance as well as the growth of your hard-earned savings while you navigate your footing in a new field.
In addition, having a personal health insurance policy can support your sense of financial security and give you the peace of mind that comes with knowing your medical costs will be covered, should you fall ill or have an accident. For example, a comprehensive health insurance policy such as Future Generali Heart and Health Insurance Plan covers 59 critical illnesses and offers a lump sum payment as soon as a critical illness covered by the policy is detected. With this lump sum, you can cover your medical expenses as well as post-hospitalization costs, allowing you to recover peacefully without having to worry about the financial strain.
Finally, taking advantage of new opportunities shouldn’t mean you are missing out on contributing to your pension. Setting up a personal pension plan can help you prepare for the future, even if you aren’t quite sure what that might look like right now. For example, a policy such as the Future Generali Lifetime Partner Plan provides protection to your family, along with a regular income for the whole of your life, up to age 100. It also provides you potential upside on the income, through cash bonuses (if declared).