EPFO extends deadline to opt for higher pension to May 3 | Know if you should opt it

Employees and employers who had contributed on salary exceeding the wage ceiling of Rs 5,000 or Rs 6,500

Employees and employers who did not exercise the joint option in the previous window while being EPS members

Employees who were members before September 1, 2014, and continued to be a member on or after that date

"If a steady income after retirement is the highest priority, investors should opt for it. But, if investors want flexibility and diversity in the retirement plan, they should explore options beyond EPFO," he told CNBC-TV18.com.

Sandeep Sehgal, Partner at Tax, AKM Global also believes that higher pension should be perceived from the long-term retirement goals perspective.

"It would surely provide an increased monthly income after retirement years and would prove to be a beneficial option for individuals who are not having any other source of retirement income. On the flip side, if individuals have other sources of retirement income (such as personal pension or investment), a higher EPS pension is not beneficial. From the taxation standpoint, monthly pension would be taxable but lump sum amount given after retirement is exempted, subject to stipulated conditions," Sehgal said.

To conclude: opting for a higher pension may not be a good enough option for those who intended to plan retirement early since the individual can only opt for EPS after completing 10 years of service and 58 years of age.

There are many ways to secure post-retirement life, for example, equity investments for dividend income and capital appreciation, real estate for rental income, interest income from debt instruments, etc. Investors should spread their retirement savings among multiple baskets instead of concentrating them in a single investment vehicle.