Gratuity is an additional benefit which employees tend to look at once they complete a few years of service with their employer. As an employee, it is quite possible that you do not know how much gratuity is getting accumulated in your account. However, it is a significant source of funds for your retirement years. Especially if you are a full-time permanent employee, this can be a part of your overall superannuation package.
Employees tend to be at a loss for calculating the sum of money they would receive and how they can invest it. While you might not know the exact amount of gratuity while you are working, there are various online gratuity calculators to help you calculate how much gratuity you have accumulated till date.
How Online Gratuity Calculators Work
Before checking your accumulated amount on a gratuity calculator, you need to be aware of a few important parameters which are required for calculating gratuity. These are-
-
Basic salary
-
Dearness allowance
-
Number of years in service
The basic formula for calculating Gratuity is:
Gratuity= (1/4)*(Basic Salary + Dearness Allowance) * No. of 6 monthly periods completed. In essence, it is 16 times the basic pay.
Depending upon your employment status, one of these formulae will be applied to calculate your gratuity amount-
Formula One – This is used when you are part of an organization which falls under the Gratuity Act. In this case,
Gratuity = Previous salary before leaving x (15/26) x Total No. of years worked
It counts 26 days as a working month with 15 days (half month) salary counted for gratuity calculation.
Formula Two – This is applicable if you work in an organisation which does not require adherence to the Payment Of Gratuity Act but you are still paid gratuity.
Gratuity = Previous salary before leaving x (15/30) x Total No. of years worked
Here, the month is accounted as 30 days.
While you might not really know the exact formulae for you, these calculators will give you a fair idea of the amount you have accumulated to receive in the future.
Better Investments
Your next step should be to plan on how you will invest this amount once you receive it. As a senior citizen, it will be essential to look out for an investment option which does not risk this capital and also pays a medium to high return, significantly higher than a savings account or Bank FD. Company FDs like Bajaj Finance FD is a great investment as they are not only rated among the highest in creditworthiness but also pay one of the highest FD interest rates.
Current Interest Rate Scenario
The interest rates in India are falling owing to excessive liquidity in the system. Company FDs give 1-2% higher interest rates than bank FDs. When you compare to other investment options for senior citizens like PPF, Senior Citizen Saving Schemes, Bajaj Finance FD gives the highest senior citizen FD rates to the tune of 8.95%.
The lowest interest rate available with a Bajaj Finance FD is 7.72% to 8% with a cumulative and non-cumulative option in a tenor of 12 to 23 months. This increases with the tenor. At 3 years you can easily earn 8.6% for the cumulative option. Also, a special rate at 15 months is available of 8.05%. Bajaj Finance FD offers one of the best rates with guaranteed safety on your deposit.
Bajaj Finance FD is also one of the highest-rated company FDs by CRISIL and ICRA, giving assurance of timely repayment. Thus, credit ratings of ICRA’s MAAA/stable rating and CRISIL’s FAAA/stable rating, you can earn the highest possible return without any effects of inflation.
You can easily earn a return on investment of 51% as a newbie investor and 54% if you are a senior citizen, as shown in the table below:
-
Investor Type
Interest rates
Principal Amount
Tenor
Interest
ROI
New customer
8.6%
Rs. 25,000
5 years
Rs. 12,765
51%
Senior citizens
8.95%
Rs. 25,000
5 years
Rs. 13,377
54%
Existing customers
8.85%
Rs. 25,000
5 years
Rs. 13,202
53%
