Career-Risk-Adjusted Selection of Retirement Instruments in India: A Multi-Criteria Decision-Making Framework for Personalised Retirement Planning

Abstract

The process of retirement planning for Indians could be described as a comparison of financial arrangements ranging from different points of view such as benefit security, ability to accumulate wealth, costs, liquidity, taxation, lifecycle management and diversification. When the income of an employee is not certain, considering career risk becomes more complex since it determines an individual's ability to withstand financial losses. This study proposes a career-risk-adjusted multi-criteria decision-making (MCDA) model to compare the Employees' Provident Fund (EPF), Employees' Pension Scheme (EPS), National Pension System (NPS), Public Provident Fund (PPF) and Atal Pension Yojana (APY). The framework incorporates bounded rationality, life-cycle thinking, asset-liability matching and diversification of portfolios. All seven criteria are judged using a shared decision matrix and there are two normative decision profiles: high career risk and stable career. For the present study, as there is no expert-judgment dataset available, transparent scenario weights are used instead of presenting the Best-Worst Method (BWM) weights, which is also known as observed preferences. The main method of ranking is Technique for Order Preference by Similarity to Ideal Solution (TOPSIS), and the second one is Simple Additive Weighting (SAW) as a robustness check. The results show that the priority of the alternatives varies depending on the decision profile; in the high-career-risk scenario, the relative importance is higher to security and liquidity while in the stable-career scenario it is higher to accumulation, lifecycle management and diversification. This means that the results of the analysis support a conditional, not universal, definition of retirement-instrument suitability. The contribution of the study is a clear and unambiguous link between the risk of employment income and the choice of retirement products, and a foundation for future empirical testing using expert or household level data.