Pension Plans
plan for tomorrow Live today,
Continue living the life you’ve always aspired to live, even after retirement. Simply follow three basic disciplines - plan your goals, invest wisely and monitor your investments.
Have a look at our Retirement Plans. Lead a stress-free life!
WHY CHOOSE RETIREMENT PLANS OFFERED BY INDIAFIRST?
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ASSURANCE THROUGHOUT YOUR LIFETIME
Earn assured returns on the total premium that you pay during your initial years and secure your future
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CHOOSE WHEN TO RETIRE
If you start investing early in life, you will manage to build a large corpus at an early age. This will help you choose your retirement age and tackle the uncertainties of life.
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FLEXIBILITY IN PAYMENTS
Pay the premium once, throughout the policy duration or for a limited period. You also have the option to choose whether to make the payments yearly, half-yearly, quarterly or monthly.
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REGULAR INCOME
Receive a definite income on a yearly, half-yearly, quarterly or monthly basis throughout your retirement years.
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CHOOSE YOUR RETIREMENT AGE
You can choose your retirement age as per your needs and can start receiving regular income between the age group of 40 to 80 years.
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ADDITIONAL COVER
Flexibility to choose various Annuity Options as per your need and requirement.
SOME FACTORS TO CONSIDER
Start early
Work out your likely retirement income
Plan based on your life stage
Annuity plans
Pension Plans
Retirement planning is an essential step to ensure that your standard of living does not fade when your professional income starts to wane. With help from reliable pension plans in India, you can continue living your life without compromising on what you want in your old age. If you factor in the increasing costs of living as well as the impact of inflation, retirement planning is more critical today than ever before.
Retiring from work is a culmination of a lifetime of service. You have completed your responsibilities towards near and dear ones and earned the right to live comfortably and securely. Ideally, your retirement should indicate the start of a fun and happy period of life—with no responsibilities, freedom to do whatever you want, and peace of mind. So as to get and enjoy all of these fun parts tomorrow, retirement planning is the serious and essential part that needs to be handled today.
Continue living the life you have always aspired to live, even after retirement. Outline your retirement goals, invest in the best retirement plans in India, and monitor the growth of your investments to ensure that your retirement planning is on the right track.
What is a pension plan?
The importance of anything in life depends on how much value you place in it. What does retirement mean to you? For most people, retirement stands for freedom from the 9-to-5 working life. It is a time to travel and enjoy everything that life has to offer that you could not make time for before.
If you want to enjoy all the benefits of this free time, the first step is to ensure that the practical and logistical aspects are handled in advance. With adequate retirement planning, you will not need to worry about your loss of professional income or your ability to meet any unforeseen new expenses after you have retired.
When you consider how consistently inflation is rising, the benefits of retirement insurance products become clear. Ensure that your retirement is stress-free with reliable retirement benefit plans.
A retirement plan or pension plan is a financial product designed to meet your specific financial security needs after your professional income ceases. A typical pension plan in India allows you to put away a little money from what you make today over a long period of time. This accumulated corpus is enhanced by compounding benefits, and you can use this amount as monthly incoming after you have professionally retired.
What are the types of retirement plans in India?
While there are many different types of retirement plans in India, they typically fall under the categories of life/immediate/deferred annuity, National Pension Scheme, Pension Funds, and ULIPs.
Pension plans with/without life cover
In a pension insurance plan, you have the peace of mind of knowing that your life is covered while you are saving for your future. In case of an unfortunate event, the beneficiaries listed in your insurance retirement policy receive a lump sum amount as the sum assured.
Some pension plans in India do not have a life insurance component. Such plans pay out the lump sum that you have built while the plan was in force to your beneficiaries in case of your untimely demise. There is no sum assured or life cover to be paid out to your nominees in this case.
Annuity insurance pension plans
An annuity plan is a policy that allows you to make single or periodic payments to build a lump sum amount that accrues interest and bonuses (if any). This corpus is then used to pay out a regular income either immediately after the end of the premium payment term or at some point in time in the future.
- In an immediate annuity plan, you get to pay a lump sum premium at the start of the plan, receive annuity immediately, and choose a payment frequency to receive the amounts.
- In a deferred annuity plan, there are two distinct phases characterised by accumulation and income. Such a pension plan allows you to build a corpus during the policy term and then receive a pension in the form of a periodic annuity payment that will begin at a time of your choosing in the future.
- A life annuity plan pays out a pension amount to the policy holder till their demise. By choosing a ‘with partner’ option, you can ensure that your partner receives the pension amount after your passing.
Conventional pension funds
Employee’s Provident Fund and Public Provident Fund are two popular examples of pension funds in India. With an EPF, all salaried employees receive a percentage of their salary as a pension fund contribution from their employer. A PPF is a well-known savings instrument that offers a long lock-in period, compounding interest benefits, and a chance to preserve your accumulated capital.
National Pension Scheme (NPS)
Developed by the Government of India, the NPS caters explicitly to those who want to build a retirement amount. This transparent instrument allows you to choose between auto and active modes. In the auto mode, investment avenues include corporate bonds, government bonds, and equity. In the active mode, 50% of investment is in equity, and the rest is in bonds.
ULIP pension plans
Unit-linked insurance plans are market-linked products that serve the dual purpose of protecting your life and actively investing your money. The premiums you pay are invested in bonds, securities, and stocks in line with your risk appetite.
What are the benefits of buying a retirement plan?
With medical advancements and increasing access to better healthcare facilities, Indians are enjoying the benefits of a longer life. Living longer would hold little value if you cannot spend your retired life comfortably. The goal is to create a financially-secure retirement experience. This is where retirement benefit plans come in.
Thanks to inflation, money is continually changing in value. The amount of money that you would need to buy something today will not be enough to purchase the exact same thing decades down the line. Retirement plans in India help you save and invest what you have today to generate what you will need in your retirement.
There are many compelling reasons to do retirement planning and buy a pension plan.
No need to compromise
With adequate retirement planning, you can ensure that you never run out of money during your retirement, even if there is no incoming salary. By saving and investing in retirement plans in India, you can systematically put away small amounts today to make sure that you never need to compromise your standard of living in the future.
Small steps towards a big goal
The journey of a million miles also begins with one small step. Pension plans are long-term investment instruments that help you regularly invest a little money over a long period. These regular savings will build up into a substantial corpus, which will be further enhanced by the effects of compounding and the addition of potential bonus amounts. Begin today for a financially secure tomorrow.
Creation of a stream of regular income
Many people are good at saving small amounts of money and putting it away for a rainy day. However, handling a significant corpus in the right way is also essential. During your retirement, what you need is a stream of regular income to take the place of your professional salary. Pension plans help you invest and reinvest your corpus to create assured income during your retirement. With retirement plans in India, you will not rue the absence of your salary.
Security plan for your loved ones
With the right pension plan, you can receive life cover that will protect your family in case of your untimely demise. You can choose an annuity plan that offers a secure retirement income to your dependents after your passing.
Supplementing provident fund savings
If there was ever a time when basic provident funds and gratuity savings were enough for your retirement, it is long gone now. Such mandatory retirement savings are no longer sufficient to cover your standard of living and needs after retirement.
In addition, most provident funds allow you to withdraw partial sums for important milestones such as a marriage or the birth of a child. Withdrawals further deplete the corpus, making it even more inadequate.
Pension plans can supplement and even completely replace the need for provident funds. If your retirement planning is taken care of, then the pay-outs received from provident funds and gratuity can be used for whatever you like.
Relieve the burden on your children
In the past, families were bigger, and there were more children for parents to bank on. This also ensured that children’s financial burden while caring for their retired parents was spread out and reduced. Today, nuclear families have become the norm, and family sizes are typically much smaller.
Without proper retirement planning, your children will face the immense financial burden of providing you assistance in your later years. This could lead to them sacrificing their dreams and aspirations due to a lack of funds. An annuity insurance retirement policy can go a long way in safeguarding your financial independence and your children’s peace of mind.
Reap tax benefits
Subject to relevant Income Tax laws in India, you can avail of tax benefits on the premiums paid in a retirement policy. Enjoy retirement insurance benefits and claim tax deductions against the premiums you have paid as well as maturity amounts received at the end of the pension plan tenure.
When should I start retirement planning?
Every season of your life brings its own set of challenges. In most cases, we spend our time dealing with the challenges of today alone. Retirement planning is not something that young people need to worry about, or is it? Most young professionals believe that retirement is a problem that is far away on the horizon. However, there are immense benefits of retirement planning today—the younger you are, the better it is for you to start retirement planning. Here’s why:
Fewer liabilities
The younger you are, the fewer responsibilities you have. Waiting to invest till you have a larger salary might sound sensible. However, the truth is that as your salary increases, your liabilities will go up too. From home loans to wedding expenses, financial responsibilities only stand to grow as you do. Retirement planning at a younger age is more straightforward than later in life.
Easy to save smaller amounts
Starting a pension plan does not require you to put away a large sum of money. It is the little amounts put away consistently that make all the difference. Instead of waiting to save a considerable amount before you invest in retirement plans in India, start today with however little you have.
Maximise the power of compounding
One of the most significant benefits of retirement insurance plans is that you get to put the power of compounding interest to use. Even the smallest amount invested consistently for years will earn compounded interest with pension plans in India. Compounding gives you the best value for your time and invested money.
Saving for a long life
There was a time when a human being’s average life expectancy was approximately 60-70 years of age. Today, reaching your centenary birthday is not an impossibility. If you consider that the typical age of retirement is 60 years and you could live for three to four decades after that, starting retirement plans as early as possible is the only sensible course of action.
Utilise tax deduction benefits
Most pension plans in India offer tax benefits against the premium amounts paid and benefits received at maturity.
How do I buy a pension plan?
Here is a handy guide to buy pension plans that will ensure your financial security in the future.
Start now
Retirement planning at a younger age is the most beneficial. The second-best time to invest in your future is today when you are the youngest you will ever be again.
Diversify your portfolio
Traditional plans that are not market-linked are perfect for those who are risk-averse. For retirement planning, consider diversifying your portfolio to include traditional savings plans, ULIPs, equity funds, and other instruments to hedge your bets against any eventuality.
Choose your retirement age
While the typical age to retire is 60 years, it does not mean that you cannot choose to retire at 45 years or even earlier. Look through the pension plans in India to find the ones that suit your requirements when it comes to returns, risk-appetite, tenure, and vestment age (when you start receiving a pension from the annuity plan).
Don’t depend only on traditional funds
Conventional retirement schemes such as EPF and PPF, and NPS are tried and tested options. However, the retirement income you receive from these traditional funds is unlikely to be enough to meet your financial security needs. Research equity-based pension plans and ULIPs , and learn what you need to buy pension plans before investing your money.
What are the types of pension plans offered by IndiaFirst Life?
IndiaFirst Life has created a collection of pension plans specifically designed to meet your retirement planning needs. Lead a stress-free life with IndiaFirst Life pension plans in your corner. Here are the types of pension insurance options offered by IndiaFirst Life:
IndiaFirst Guaranteed Retirement Plan
- Non-linked, participating, endowment deferred pension plan
- Guaranteed annuity insurance
- Options to invest—regular, limited, or single premiums
- Policy term of 40 years
IndiaFirst Immediate Annuity Plan
- Non-linked, non-participating, immediate annuity plan
- Choice of vestment age between 40-80 years
- Joint life option to protect your partner
- Return of purchase price option
IndiaFirst Life Guaranteed Annuity Plan
- Non-linked, non-participating, individual annuity plan
- 12 annuity options, including life annuity, deferred life annuity, the return of purchase price, annuity certain, and escalating life annuity.
- Assurance of lifetime income
- Joint life option to protect your partner
FAQs
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Why do you need a retirement plan?
A retirement plan ensures your financial security even after your retirement. It offers a stable and structured income in the long run based on the money you have invested. Investing consistently over a long time has multiple benefits including enhancing your corpus with the power of compounding interest.
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What is the right age to invest in a retirement plan?
The sooner, the better. Start early to gain a longer investment horizon. The earliest you can invest in a retirement plan is at 18 years. The goal is to invest early enough, so you have the time to save a large corpus, enjoy compounding benefits, and have access to your investment when you reach your chosen retirement age. Insurance for senior citizens may be expensive, but it is also necessary.
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How do I start with retirement planning?
Before you start planning for your retirement, make sure you understand your future needs as well as your current income. Kick-start your retirement planning with clarity by using Wealthify, a tool that simplifies and makes investing affordable and easy.
While investing in pension plans, some factors to consider are your monthly expenses, projected monthly expense needs during retirement, inflation, risk appetite, the possibility of tax deductions, and personal loan feasibility against the retirement policy.
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What are the tax benefits I can avail of with pension plans?
With IndiaFirst Life pension plans, you get to enjoy tax benefits on the premiums you invest as well as the maturity of those, under Section 80C and Section 10(10D) as per prevailing income tax laws.
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I have a PF account; do I still need a retirement policy?
Yes. Factor in inflation and an increased lifespan due to better healthcare while you do retirement planning. You will find that the corpus in your PF is nowhere close to what you will need. Diversify your savings and investment portfolio to ensure your financial security post-retirement.
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What is the vesting/vestment age mentioned in retirement policies?
The vesting age is simply the age at which your pension returns start. Depending on the type of pension plan you have chosen, you may be able to defer pay-outs to a later date when you will need it more.
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Why do I need to account for inflation in my retirement planning?
The rising of prices is an inevitable eventuality all over the globe. Though the effects of inflation may seem minor when looked at in a short period of time, it is a massive change over the decades. For instance, if you consider a 5% rate of inflation as it works with a small amount like Rs. 100, the value you have is reduced to Rs. 95. Now, consider a 5% inflation growth every year. In two decades, the purchasing power of a substantial sum like Rs. 20 lakhs will have fallen to Rs. 7 lakhs or so.
Furthermore, inflation is all-encompassing. Even if you do not intend to make big purchases in your retirement, you will still need to spend money on staples like food, medicines, healthcare services, groceries, utility bills, and more. A smart pension plan can help you safeguard your financial future.
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How much of my savings should go towards retirement planning?
The exact amount that you need to put aside for retirement depends on factors like your monthly income, projected expenses in the future, inflation-adjustment, and your specific needs. However, a good rule of thumb is that at least 15% of your monthly income should be put aside towards retirement planning.
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What are the types of pension plans in India?
You can choose from different types of pension plans in India. The primary categories include:
Deferred annuity plans – A long-term investment instrument wherein you are required to contribute premiums for a number of years so you can withdraw a partial lump sum after your retirement and continue receiving monthly pay-outs after that. Traditional deferred annuity plans are suitable for risk-averse investors as they invest in debts and government securities. Unit linked insurance plans or ULIP retirement insurance plans offer better tax benefits but invest in the market.
Immediate annuity plan – This instrument requires you to make a single lump sum premium payment, so you start getting a monthly pay-out immediately.
Employee's Provident Fund – An EPF follows the rules set by the EPFO and is an option for all salaried employees. In an EPF, both the employer and employee contribute a fixed percentage of the salary towards a retirement fund in the employee's name.
Public Provident Fund – A PPF allows you to invest a maximum amount of Rs. 1.5 lakhs per year with a lock-in period of 15 years.
National Pension Scheme – NPS contributions can start as early as 18 years of age. You can choose to invest under active mode and auto mode, depending on your risk appetite.
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How can I plan for retirement in India?
If you hope to ensure a happy and stress-free retired life, retirement planning is a must. Factor in variables such as your monthly income today, your proposed retirement age, what you hope to get as a pension amount, and inflation.
Pension plans are retirement benefit plans that offer you the dual benefit of insurance life cover and investment. Typical pension insurance plans involve saving money at a steady pace for a chosen number of years. This corpus is made bigger and better, thanks to the power of compounding interest. When you reach your age of retirement, and your professional income ceases, an annuity pension plan ensures a steady flow of income when you need it the most.
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Can you have two pensions?
In addition to governmental pension schemes such as the NPS (National Pension Scheme) and the APY (Atal Pension Yojana), you can have multiple pension insurance plans offered by private companies and insurance providers. However, an individual cannot have two of the same government pension accounts such as two NPS accounts for one individual. Also, there is a cap on the total amount that you can contribute towards pension schemes if you want to receive tax deductions for the money invested.
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What is difference between superannuation and retirement?
Superannuation is a type of retirement. Retirement refers to the ceasing of professional income from work at any age. You can choose to retire whenever you want. Superannuation specifically refers to retiring because you have reached the retirement age set by the government. In India, superannuation occurs between 60 and 65 years of age. A superannuation benefit is a type of retirement benefit that is offered by employers to their workers in the form of an organisation retirement program or company pension policy.
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