Financial Calculators
Pension Gap Calculator
An assured pension covers part of the bill, and less of it every year. This finds the corpus that covers the rest.
Corpus needed to bridge the gap
₹94,58,401
pension covers 62.5% of expenses today
- Shortfall in the first year, per month
- ₹30,000
- Total shortfall over 25 years
- ₹2,76,82,387
Expenses inflate every year; the pension rises only with Dearness Relief, which historically lags. Each year's shortfall is discounted at the corpus return to find what must be set aside at retirement. An assured pension shrinks the problem; it does not remove it.
These figures are for illustrative purposes only and are not investment advice. Please consult your investment adviser for investment related advice.
Why a good pension still needs a plan
A defence or government pension is one of the strongest financial positions in the country: indexed, guaranteed, for life. But it is indexed to Dearness Relief, and household expenses tend to rise faster than DR, especially for healthcare and for children who are still studying at the time of retirement. The gap between the two is small in year one and wide in year twenty.
This calculator runs that gap year by year and discounts each shortfall back to retirement day, giving the corpus you need to have invested at that point to keep the household whole for as long as you choose.
Year-by-year shortfall, discounted
Expense(y) = expense x (1 + inflation)^(y-1)\nPension(y) = pension x (1 + DR growth)^(y-1)\nGap(y) = max(0, Expense(y) - Pension(y))\nCorpus = sum of Gap(y) / (1 + return)^(y-1)Worked example: expenses of Rs 80,000 a month against a pension of Rs 50,000 covers 62.5% today. With expenses inflating at 6% and the pension growing 4% with DR, the shortfall over 25 years totals Rs 2,76,82,387, and the corpus needed at retirement, earning 8%, is Rs 94,58,401.
Frequently asked questions
Where does the corpus come from?
For most serving personnel, from terminal benefits: DSOP, gratuity, leave encashment and commutation. The Terminal Benefits Planner totals those; if they exceed the corpus here, the surplus is genuinely free for other goals.
What DR growth rate should I assume?
DR has averaged around 4-7% a year over long periods but lumpily. Assuming it lags inflation by a point or two is prudent; assuming it matches is optimistic.
Should the corpus be in equity?
Not all of it. The first few years' shortfall should sit in debt; money not needed for ten years or more can be in equity. The 8% default is a blended return for such a split.
What about the spouse after me?
Family pension is lower, usually 30% of emoluments rather than 50%. For a plan that outlasts you, run the calculator again with the family pension figure and the spouse's expected expenses.
Cover the gap before it opens.
We map the shortfall against terminal benefits and build a corpus that keeps pace with real expenses.