Find the best pension plan in India by following these 8 Steps

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Life has no guarantees. We live in an unpredictable reality where we can never be sure of what is about to happen the next moment. With this uncertainty, it happens to be of the most extreme significance to design your retirement with the best pension plan in India and secure your future.

What is a pension plan?

A pension plan is a sort of fund to which a particular amount of cash from your salary is contributed during the duration of your employment. This investment further aids in drawing instalments during the retirement time frame.

Types of pension plans?

1. NPS

National Pension Scheme (NPS) was introduced by the Government of India. People need to invest in this plan until 60 years old. The least amount you must invest in is ₹ 1000. The profits rely upon the performance of the funds (debt and equity funds) you pick.

When you resign, you can withdraw 60% of the reserve funds and should utilize the rest 40% to purchase an annuity.

2. Public Provident Fund (PPF)

PPF is a long-term investment plan with a lock-in period of 15 years. Yearly you can contribute a limit of ₹ 1.5 lakhs to your PPF account. You can pay forthright or through twelve installments staggered over the year. Your PPF investments are qualified for tax deductions under Section 80C of the Income Tax Act (ITA).

3. Employee Provident Fund (EPF)

EPF is a government savings platform for salaried people. Both your employer and you need to make equivalent commitments towards your EPF account. Your portion is taken out from your pay consistently. On retirement, you get the total amount contributed by you and your employer alongside the accumulated interests.

4. Deferred Annuity

A deferred Annuity option requires an investor to construct a corpus. He/she can utilize this corpus later to purchase an annuity at the hour of retirement. The Life Insurance Company promises to pay the insurer a regular or single amount sum at the future maturity date. Further, you can buy annuities by a one-time installment technique or through a normal premium installment strategy. These additionally have the advantage of tax exemption.

5. Immediate Annuity

Immediate Annuity is also a sort of life insurance premium pension plan that vows to pay a progression of annuity installments for the duration of your life. For this annuity, the payment is done in a single premium. The annuity installment recurrence can be month to month, half-yearly, quarterly, or every year according to the decision of the Annuitant. These annuities offer ensured pay very quickly. The premium is tax exempted according to the Income Tax Act 1961.

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6. With and Without Cover Pension Plans

Pension Plans with cover implies the existence of the Policy Holder is covered and upon his demise, a single amount sum is paid to his close relatives otherwise called the nominee. These plans resemble the average protection plan however the sum paid under these plans isn’t impressive. The enormous sum put resources into these plans goes to the structure of the corpus rather than covering the existence hazard.

Pension Plans without Cover are those plans where the existence of the Policy Holder isn’t covered. Upon the passing of the Policy Holder, the candidate just gets the corpus so worked during his lifetime. Just Long Term protection plans have the choice of life cover like Deferred Annuity Scheme, dissimilar to Immediate Annuity which is present moment and doesn’t cover life.

7. Pension Funds

Pension Funds are one more kind of Retirement Pension Plan which are famous among investors. These Funds as a rule have a lot of cash contributed and the profits are higher when contrasted with the other retirement plans.

8. Life Annuity

Life Annuity is the most well-known kind of Pension Plan. Under this plan, a Policy Holder or Annuitant has ensured a life pension annuity payment for the duration of his life. It likewise gives the choice of Joint-Annuity where the annuity is paid to the life partner even later the demise of the Policy Holder.

There are numerous benefits of a pension plan that one cannot ignore. Secure your future today by investing in the best pension plan in India.

FAQ

  1. What is an annuity?

The regular payouts you get of your best pension plan post retirement are called annuities. The annuity can be availed on a one/three/six/twelve-month basis.

  1. I already have a provident fund account. Do I still need a pension plan?

Yes, you do. ‘PF is just not enough.’ The ever-growing inflation in the market will make your PF amount look quite minuscule in the future.

  1. What are the tax benefits on pension plans?

According to section 80CCC of the Income Tax Act, the premiums paid out for the annuity plan are exposed to a maximum of up to Rs 10,000 on taxable income.

Read also: Money Habits in Your 20s That Will Make You Financially Independent by 40

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