How armed forces personnel can plan for a secure post-service life

Early retirement forces personnel to plan for a long post-service life, yet many lack adequate financial awareness

- Shipra Singh

As a young officer, personal finances were the last thing on my mind," says retired Colonel Ajit Kumar Singh Chauhan, 63, of the Indian Army. "Juggling official commitments, physical training, games with troops and mandatory evening parties—there was hardly any time to focus on financials."

Chauhan says financial awareness in the Army was always low, and seniors rarely spoke about money. "Financial ignorance and lack of time combined—saving in the provident fund (DSOP) was an end in itself during my service years." Defence Service Officers Provident Fund (DSOP) requires a minimum 6% contribution with no employer match, and currently offers 7.1% interest.

Now retired in Bareilly, Chauhan lives on military pension and a mutual fund withdrawal plan. "I started SIPs in 2004 after learning about MFs. On retiring at 54 in 2016, I invested my entire corpus in equity funds, averaging over 15% annual return." A stable pension allowed him to take risks.

Rising salaries, old habits Salaries in the armed forces rose significantly after the Sixth (2006) and Seventh (2016) Pay Commissions. Earlier, they barely covered expenses. Chauhan, with two daughters and 23 years of service, earned ₹26,500 before 2006. "Had my wife not been working, making ends meet would have been a tall order. Back then, it was routine for defence officers posted in Delhi-NCR to dip into their provident funds to complement the salary," he said.

"My salary under Sixth Pay Commission rose to about ₹180,000 and provided financial stability."

Today, a colonel with 15-25 years of service earns an average gross salary of ₹2.3 lakh. Starting salaries for officers are around ₹1.1 lakh. For other ranks (OR), salaries range from ₹40,000 to ₹1.1 lakh, depending on rank. The figures can rise by 10-40% with HRA and allowances during field or combat postings.