Secure your Retirement with a Pension Scheme in India
Planning for retirement is an essential aspect of everyone’s life. Considering the rising inflation and limited social security for senior citizens, it is important for you to start planning for your retirement early. With the help of a pension plan, you can overcome unexpected expenses arising out of an emergency after retirement.
A pension scheme in India is the one type of retirement planning instrument in which an individual can get a lump sum from the insurance companies. There are various types of the best pension plans available in India by various insurance companies. You can create a significant corpus by investing an affordable amount in suitable pension plans.
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What is a Pension Plan, and How Does It Work?
A pension scheme generally comes with multiple benefits such as investment and insurance cover. The pension scheme in India requires you to pay a fixed amount regularly over a specific time period. When you retire, you can receive a constant flow of income on a monthly or yearly basis, or you can also receive the income as a lump sum on your retirement. The pension plans are considered as one of the best investment options for the retirement.
It is essential to start investing in a pension plan which is suitable for you at an early age to take advantage of the power of compounding. It will make sure that you have an adequate corpus to tackle the consistently rising inflation of the country efficiently in your senior years. You can also easily manage your post-retirement expenses and also your healthcare costs.
How to Choose the Right Pension Plan?
The advantages of pension plans and their working vary significantly based on the type of plan that you choose. If you want to make the right decision, you need to thoroughly understand the advantages and working of different plans.
Choosing the best pension scheme in India is not an easy task. If you are not able to make a decision, you can also get in touch with a top insurance provider to understand more about the popular retirement plans. The insurance provider can help you to choose the best pension plans based on your needs and expectations.
Types of Pension Schemes in India
A pension plan also covers the life insurance of the policyholder. Under this plan, a lump sum amount is paid to the beneficiary of the policy in the event of the unfortunate demise of the policyholder.
Let’s have a look at some of the best pension plans available in India.
NPS – National Pension Scheme
The Indian government introduced the National Pension Scheme (NPS) as a financial cushion for retired people. An individual can invest in this scheme until 60 years of age and the maximum amount to be invested is INR 1000. The money will be invested in debt and equity funds based on the policyholder’s reference. At the time of retirement, the maturity amount can be withdrawn.
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PPF – Public Provident Fund
Public Provident Fund is a long-term investment scheme with 15 years of tenure. So, the impact of compounding is enormous, especially towards the end of the term. The maximum limit to invest in PPF is INR 150,000 yearly. It is one of the best pension schemes in India. The PPF account also provides tax benefits under Section 80C of the Income Tax Act, 1961. The interest rate of PPF is set by the government of India quarterly.
EPF – Employee Provident Fund
Employee Provident Fund is a government savings platform for salaried employees. Both the employer and the employee have to make an equal contribution towards the EPF account of the employee. On retirement, the employee will receive the total contributed amount along with the accrued interests.
Annuity Plans
The Annuity plan is very popular as it provides a life cover along with a regular source of income. If any unfortunate event occurs to you while the plan is active, your family members will receive a lump-sum payout.
There are two types of annuity plans in the market:
- Deferred Annuity: It is a contract made with an insurance company to help you build a retirement corpus. You can make a simple lump sum payout or pay regular premiums over a fixed time period. This scheme helps you to invest as per your resources.
- Immediate Annuity: It is a contract between you and the insurance company, where you pay a lump sum amount and receives guaranteed income for a lifetime, starting almost immediately.
There are many pension schemes in India. You can choose one as per your requirement and safeguard your future. Being financially independent is one of the biggest blessings that you can have during your golden years.