99% say gratuity isn’t enough, most save less than 15% of salary for retirement: Report

A recent survey by Grant Thornton Bharat has revealed that most working Indians are contributing too little towards their retirement savings, despite having high expectations from their post-retirement income.

According to the pension survey report titled ‘India’s Retirement Reality and Readiness’, 74% of respondents contribute between 1% and 15% of their salaries to retirement plans. The most common contribution brackets were 1-5% (27.57%) and 6-10% (27.24%), suggesting a cautious savings approach even among higher-income groups.

While the report provides detailed demographic breakdowns and percentages across various parameters (income, contribution levels, retirement expectations, etc.), it does not state the total number of respondents surveyed in August-September 2024. 

Alarmingly, only a small fraction—less than 6%—contribute more than 25% of their salary towards retirement. Analysts say this is worryingly low given inflationary pressures and increasing life expectancy in India.

This under-contribution contrasts starkly with retirement expectations. Over 55% of participants said they expect a monthly pension exceeding ₹1 lakh, with 21% hoping for ₹1–1.5 lakh, and nearly 21% aiming for over ₹2 lakh per month. However, just 11% felt confident their current retirement investments would be sufficient to meet these goals.

The survey, conducted among a predominantly private sector workforce, highlights the growing disconnect between retirement dreams and actual savings behaviour. A key insight shows that even among high-income earners—those making over ₹40 lakh annually—58% contribute only 1–15% of their salary towards retirement.

In contrast, those in the ₹20–30 lakh income group appeared slightly more proactive, with 75% contributing 6-20%. Their pension expectations ranged from ₹70,000 to ₹1.5 lakh per month, which experts describe as more realistic compared to their savings rates.

The report also highlights broader challenges in India’s pension planning. A significant 75% of respondents expressed concern about the security of their retirement investments, and 60% remained neutral about the returns from their Public Provident Fund (PPF) investments. Meanwhile, 99% of those eligible for gratuity felt the amount was insufficient for retirement.

Financial literacy emerged as a major gap. Many respondents said they were unaware of schemes like the Atal Pension Yojana, and 30% did not understand how their pensions were calculated.

Experts warn that without stronger financial education, more attractive pension products, and policy-level reforms to encourage higher savings, India could be heading towards a retirement preparedness crisis in the next decades.

Grant Thornton Bharat suggests that to close the gap between expectations and reality, individuals need to start contributing earlier and more aggressively. “For instance, to receive a pension of ₹1 lakh per month, a 30-year-old would need to invest ₹6,000 monthly till the age of 60, assuming a 12% annual return and a 6.75% annuity rate,” the report explains.

As India's young workforce ages, how they save today will determine the quality of their retirement tomorrow. The message from this survey is clear: when it comes to retirement, low contributions now can lead to high regrets later.