May 2019:: Employee Pension Scheme and FIRE

We were late in sharing the updates for the last month. It was due to a week-long vacation that started at the end of May.

The curious case of Employee Pension Scheme

In our earlier blog post on EPF, we shared that 8.33% of the employer’s EPF contribution goes to the Employees’ Pension Scheme. The EPS contribution had an upper limit of Rs.

541 per month before September 2014, post which it was increased to Rs. 1250 per month. More on Employee Pension Scheme -> https://www.paisabazaar.com/saving-schemes/employees-pension-scheme/

We realized that around Rs. 2.5L of our assets are actually in EPS. Now, one cannot withdraw the EPS amount after completing 10 years of service. If you have completed 10 years of service, an EPS scheme certificate is generated which can be used to withdraw a pension after attaining 58 years of age. From our perspective, the contributions and assets in EPS can’t be considered for our FIRE target and hence we reduced the whole amount from our retirement assets.  

Other Highlights

• Expenses in May were 16% of the income. Even better than April.
• Around Rs.1.9L was deposited as the EPF interest for FY 2018-19. 
• Rent & bills(mobile, electricity, maid) continued to be the biggest spending category.
• Spends on groceries was the second biggest contributor.
• Entertainment expenses were at 8% of total expenses.
• No unplanned or emergency expenses. Also, no spend on clothes and medical. 
• While stocks’ evaluations were down, MFs’ evaluations were slightly up. 

Below is the pie-chart depicting category wise expenses:-

Saving steps

• We recharged our grocery delivery app(Milkbasket) through Paytm for Rs. 2500 and got 10% cashback in the app account. That’s 5 liters of free milk ;). 
• We bought a beer crate from a wholesale shop and saved around 40% compared to the retail shop. 

Investments

Opened an FD and contributed to existing RD. Also invested in Mutual Funds and stocks when markets were down.

Forecast for next month

Spends in June are expected to be slightly higher due to a week-long vacation. We don’t have any plans for shopping(clothes, gadgets, etc.). The target is to limit the spends below 25%. 

Retirement corpus as on June 1st 2019 – Rs. 1,28,87,208

Previous month’s update – April 2019