Pensions Plans



Pensions plans gives the benefits of both investment and savings by offering you the most reliable income source after retirement. It creates a retirement corpus which is invested on maturity to generate a continuous flow of income for your expenses. The investment amount shall depend on your monthly income requirement during your post retirement years. By using retirement calculators, you can easily calculate your expected pension amount.
Pension plans are also called as ‘Retirement Plans that saves your lifestyle after retirement. Due to increasing living cost, proper planning has become necessary to enjoy comfortable retirement life.

Why Pension Plan is necessary?

Even if your savings are high during your working life, but still the best retirement plan is essential as savings are used in emergencies and get finished quickly. An pension plan protects your flow of income for fulfilling basic needs post retirement.

Pension Plan Types

 ›  Immediate Annuity
In an immediate annuity plan, one has to deposit a lump sum amount and instantly, pension will start. It is further differentiated into following categories:-

•  Annuity Certain
According to this clause, annuitant receives a fixed sum of amount for certain number of years; the annuitant can decide the period. In case annuitant passed away before expiring the term period, the annuity will be paid to beneficiary.

•  Guaranteed Period Annuity
According to this annuity option, annuitant will receive annuity for the term period and after expiring the term period as well. During the policy term, if annuitant dies, then the annuity will be received by the beneficiary. Pension will continue throughout life only if annuitant survives.

•  Life Annuity
Under this option, annuitant will get pension income regularly until death and in case annuitant selects ‘with spouse’ choice, then the pension amount will continue and be paid to the spouse after the death of annuitant.

 ›  Deferred Annuity
It helps to build a financial corpus through regular or single premiums over a policy term. Pension will start when the policy term period is expired. The accumulated amount is consists of guaranteed additions, bonuses and sum assured and invested to build flow for regular income.

 ›  National Pension Scheme
Government has been launched New Pension Plan for those who want to build pension amount. Put your savings in new pension plan and then, it will be invested in debt market and equity as per your choice. At the time of retirement, you can withdraw 60 percent of total amount and remaining 40 percent is used to purchase annuity. You will not get tax benefit on the maturity amount.

 ›   Pension Funds
This is one of the best ways to generate corpus amount and are meant for long term period.

Features & Advantages

•   Tax Benefits
The final payout is offered in two days. 33 percent of final pay out withdrawn in lump sum and is not eligible for tax benefits. However, the remaining amount is taxable.

•   Minimum Guarantee
According to IRDA guidelines, there should be ‘non-zero returns’ on all premiums or guaranteed maturity benefits on each pension plan in India. Most insurers guarantee at least 1% of total premium over the complete term period of policy.

Pension Plans ‘with cover’ / ‘without cover’

Pension plan with cover includes life cover component. It implies that on the death of the insured, a lump sum amount is received by the family members although the cover amount is not high as a large part of premium amount is shifted towards developing the corpus instead of covering for life risk. Pension scheme ‘without cover’ implies that life cover is not included in the policy. Currently, deferred annuity schemes come with cover whereas immediate annuity schemes are available ‘without cover’.