Tips to choose the best pension plans in India - Greyfont

Tips to choose the best pension plans in India


Everyone wants to lead a happy and stress free life after retirement. Research says that life expectancy has gone up in the past 10 years so, the longer you live you need more money to survive. When you retire you have all the time in this world for those things which you wished to do but did not have time. There are numerous question that bothers you like what age to retire? How much should be the savings post retirement? With zero income during that later stage in life it seems difficult to maintain the same lifestyle which you had lived. For that flow of income we rely on our savings. But would that suffice? There are medical problems come knocking unknowingly, you might want to go on vacations etc…you don’t want your funds to run out. Retirement planning is a long term process and you can not afford to start in your late 40’s or 50’s. You need to organize for a constant cash flow after your retirement.


What is a Pension Plan?

Retirement Plans as they are commonly known helps you to save towards a fix income after your retirement. It may be a lump sum amount or you may be paid on regular basis by your insurance company on your retirement. For this you have to ensure to invest a certain amount for a specific term to secure your future.


Features and Benefits of Retirement Plans


1. Early planning - while planning investments it will be better for you if you start early during your financial life. Invest regularly in insurance to get benefits post retirement. You need to chalk out on your minimum guaranteed retirement income. 

2. Tax exemption - Under Section 80C,80CCC and 80CCD of the Income Tax Act, 1961 the policy holder is eligible for tax benefit.

3. Death benefit - If the policy holder dies the nominee can avail death benefit during the term of the pension plan.

4. Liquidity - these are low equity products. The insured can go for early withdrawals in case of emergency. But these may imply charges and additional taxes.

5. Accumulation phase - The phase where you make investments. The investments are accumulated to create a corpus. You start paying your premiums and money gets accumulated through the tenure of the plan.

6. Vesting age - At this age you start receiving your monthly pension. The vesting age is from 40 years to 70 years in most of the policy plans.

7. Payment period - During this period you receive the pension after retirement.

8. Long term savings - Returns are assured so, these are known as the long term saving schemes.

9. Flexibility - You can choose the way you want your payouts to be. They may be lump sum or installments or annuity payments.

10. Loan against pension plans - Few plans have this facility where in you can avail a loan against your retirement corpus.


Tips to choose the right pension plan


1. Equities - as compared to other assets like fixed deposits, gold or bonds equities add to the value of your pension plan. These equities can be in the form of stocks or pension plans or funds.

2. Maturity Benefits - these are based on the sum assured. On maturity of the policy the policy holder gets sum assured along with the bonus.

3. High sum assured - go for the plans which assures high sum on maturity with additional bonus.

4. Death benefit - traditional pension plans provide life coverage during accumulation phase. The benefit can be withdrawn as a lump sum or as an annuity plan. The pension benefits the nominees or the dependents.

5. Financial planner - you should consider hiring an experienced financial planner in case confusion. This will help you to sail smooth through the retirement plan and execution process.


In Short

To cut the long story short, understand before jumping to a cheap pension plan. Consider your income and the payouts .Research about the benefits post maturity. Opt for the best retirement plan possible.


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