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2 mins Read | 2 Years Ago

Investing in a Pension Plan – A Great Way To Secure Your Retirement

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Enjoy your post-retirement life without any financial strain. Start investing in a pension plan, which is a great way to have secured golden years of life. Read further to know about the pension plan.

Successful financial planning is one that covers all aspects of your life, right from marriage, starting a family, buying a home or a car and most importantly, your retirement. Not many understand the seriousness of planning for retirement, which is the most common reason for people facing financial troubles.

Retirement planning is a crucial investment of your life, considering the inflation rate, rising medical costs, increasing life expectancy, high standard of living and others. Even if you begin saving a small amount, it can make a huge difference in your retirement corpus. You can build a healthy corpus and ensure regular income flow once you start investing in a pension plan.

The pension plan has dual advantages of insurance and investment. Accumulate a fixed sum in a phased manner. When it comes to choosing the best retirement plans, Public Provident Fund is the most dependable option. Apart from this, there are various other plans:

  • Deferred Annuity: You can invest in the plan through Systematic Investment Plan (SIP) or paying lumpsum amount. A retiree will receive pension after the end of the term.
  • Immediate Annuity: If you opt for this plan, you will have to pay a lumpsum amount. Pension begins right away once you start investing. Save taxes on premiums paid.
  • Life Annuity: The person continues to receive a pension till death. If you choose “with spouse” option, then the policyholder’s spouse will get pension after the demise
  • Guaranteed Period Annuity Plan: The annuity is disbursed after the term of 5 to 20 years
  • National Pension Scheme (NPS): This is a Government-backed pension plan, wherein your money is invested in equity and debt financial instruments. You are allowed to withdraw 60% at the time of retirement and the rest amount if used to buy the annuity plan. Taxes are levied on 20% of the corpus upon maturity.
  • Pension Funds: The Pension Fund plan is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). The plan offers better returns.
  • Annuity Certain: The policyholder gets the pension for a specific period. Under this plan, the nominee can get pension after the demise of the policyholder.
  • With Cover Pension Plan: This pension plan has the benefit of cover, where you can offer cover for your dependents financially. The nominee receives a lump sum in case the policyholder dies.

Benefits of Pension Plans:

  • Fixed Income Flow: Investing in a pension plan is a great option to secure your retirement. Get fixed monthly income, based on the plan you select.
  • Liquidity: Most retirement pension plans have restricted liquidity flow, but some policies allow you to withdraw in-between the accumulation period.
  • Tax Benefit: Here are few pension plans like National Pension System (NPS) and Atal Pension Yojana that offer tax-saving benefits under Section 80CCD of the Income Tax Act.
  • Accumulation Period: Accumulation period is a timeframe when you begin saving money until you build a sizeable corpus for retirement. The investment can be periodical or lump sum.
  • Payment Period: This is the time when retirees start receiving pension regularly after the retirement.

There are some of the variants and benefits of pension plans. If you’re planning to initiate retirement planning, then opt for ICICI Banks pension plans. Start investing for your golden years to enjoy a happy and peaceful retired life.

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