Pension Plans

A pension plan is like a savings account for retirement. You put money into it regularly until you retire. After retirement, you get that money back as a regular payment, kind of like a salary, to help with expenses. This helps you in securing your future and dealing with any difficulties you may face without being dependent on anyone.

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Highlights Of Pension Plan

Regular income after retirement
Insurance coverage
Safe investment
Tax benefits

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Pension Plan - Everything you Need to Know

What is a Pension Plan

Investing in a retirement pension plan is a smart way to save a lot of money over time. This helps secure your financial future and prepares you for unexpected expenses, ensuring a steady income after retirement for stability. Choosing the right pension scheme is vital for long-term financial support in your retirement years.

Types of Pension Plans

Deferred annuity

You can accumulate corpus by making a single or regular payments.

Immediate annuity

Invest a large sum and start earning immediate annuities as a pension.

Annuity certain

You will receive annuities for a fixed number of years and your nominee will receive benefits in case of your untimely death.

National pension scheme

Indian Government and post offices offer various pension plans where savings are paid out after retirement.

Pension plans with life cover

Includes life cover and investments; the family receives a lumpsum in case of the policyholder's demise.

Features and Benefits of a Pension Plan

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Regular income

A pension plan gives you to steady stream of money at regular intervals, ensuring financial independence.

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Annuity

There are four types of annuities – immediate, deferred, fixed, variable and lumpsum. Immediate starts right away, deferred starts later, fixed pays the same amount throughout, variable offers varying payouts, and lump sum pays out all at once.

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Accumulation time

Retirement plans allow one time or monthly premium payments.

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Vesting age

The age when you start getting a monthly pension. Many choose 45 to 50 years, while some go up to 90 years.

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Surrender value

If you surrender your plan early, this is the amount that the insurer pays you. However, there's a minimum period required to get this value.

How to Select the Best Pension Plan

Here are some factors you must consider while buying a pension plan in India.

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Payout or maturity amount

Consider your monthly expenses, inflation, life expectancy, and medical costs when calculating the desired maturity amount.

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Investment term

The longer you invest, the better it is.

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Investment amount

Your premium is based on the desired payout at the end of the policy period.

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Riders

Look for additional coverage and emergency support.

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Type of plan

Choose from options like GRP, equity, debt, or balanced funds based on payout and term.

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Premium payment term

Check if you can pay in a single or regular installments over 5, 7, or 10 years.

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Premium payment frequency

Choose quarterly, semi-annual, or annual payments as per your convenience.

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Policy Details

Review policy documents for charges and benefits before choosing any plan.

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Compare the plans

Shortlist and compare plans based on payout terms, interest rate, annuity options, vesting age, etc.

Documents Needed to Buy a Pension Plan

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Address proof: Driving license/bank statement or passbook with latest entries/passport/voter ID/Aadhaar card/ration card

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Identity proof: Aadhaar card/voter ID/passport/PAN card

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Age proof: PAN card/Aadhaar card/passport/voter id card/marriage certificate/ration card/birth certificate/driving license

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Photo: Passport-size photographs of the individual

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Income proof:

  1. For high sum assured cases, income proof is also needed.
  2. Salary slips of last 3 months/Income Tax Returns/employer certificate/latest bank statement/latest form 16.

 

Benefits of Comparing Pension Plans

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Improved returns

You can identify high-performing investment plans with better returns to achieve your goals more effectively and faster.

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Best coverage

In an investment policy, there are different types of riders available. You can easily compare and choose a plan that meets your specific requirements and offers the best coverage.

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Understand the benefits

You gain a better understanding of the investment market and learn about the different types of benefits for staying invested for a particular time to get the payout.

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Find your ideal plan

Once you compare the above points, you can find the right plan based on your risk appetite and customise it as per your needs.

Plan Comparisons

Features

New age retirement product - from Insurance Companies

NPS

PPF

Tax-free Income on retirement

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Tax-free fund value withdrawal

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Tax exemption on the amount invested

Section 80C – up to ₹1.5 lakhs
Section 80C – up to 1.5 lakhs and ₹50,000 section 80CCD (1B)
Section 80C – up to ₹1.5 lakhs

Flexibility to fully withdraw fund value anytime

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Yes (if the corpus is less than equal to 2.5 lakhs)
Yes, only after the 6th financial year.

Flexibility to increase/decrease pension

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Choice of multiple investment strategies to maximise returns

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Ask Anything as We Have Answers to Everything in Insurance

Annuity is the payment that is received at regular intervals after retirement through your pension plan. It can be either received on a monthly, quarterly basis as well as on bi-annual or annual basis. There are different kinds of annuities available under a retirement plan, namely;

  • Deferred Annuity
  • Immediate Annuity
  • Fixed Annuity and
  • Lump Sum Annuity

For retirement, the minimum age of entry is 18 years, while 65 years is the maximum entry age of retirement for most such plans.

All pension plans have a minimum guarantee. This minimum guarantee is the guaranteed amount that the insured will surely receive at maturity or the end of the policy term.

The key features of a retirement plan are:

  • They offer different types of annuities
  • They help in investments
  • They aid with compounding benefits
  • They allow guaranteed income after retirement
  • They allow tax benefits

The reasons to purchase a retirement plan are many, such as:

  • It helps in accumulating a good amount of capital to make one financially independent after retirement.
  • It helps one to enhance their corpus for the phase of life after retirement.
  • It also allows death benefits to the nominee in case of the unfortunate death of the policyholder during policy tenure.

Depending on the plan, some retirement policies allow partial withdrawals of money after a certain period of time during the tenure of the policy.

The different factors to consider while purchasing a retirement policy are:

  • The monthly expenses of the policyholder or how much money you think you would require per month.
  • You have to check the inflation also
  • Your life expectancy also has a role to play
  • Besides, medical expenses and debts are also needed to be considered before buying a retirement plan.

To determine pension various things are considered such as the gender of the policyholder, savings amount, age of the policyholder as well as the chosen mode of annuity by the policyholder.

Different types of retirement plans are:

  • Immediate annuity retirement plan
  • Deferred annuity retirement plan, and
  • NPS or National Pension Scheme

Yes, you can have multiple plans of retirement. You can invest in different plans as per your need. But, for NPS or National Pension Scheme only one plan is allowed per person. So, you cannot buy an NPS more than one time.