If retirement is on your mind, one of the first thoughts is bound to be the securement of steady income sources, such as a pension or annuity. A pension plan is a financial product designed to provide individuals with a steady income during their retirement years. It ensures financial security and stability when regular employment income ceases.
What are Pension Plans?
They are financial products that accumulate funds during the working years of an individual. These funds are then invested in various financial instruments to grow over time. Upon reaching the retirement age, the accumulated corpus is used to provide regular payouts.
Benefits of Pension Plans
Regular Income Post-Retirement: Ensures a steady stream of income after retirement.
Tax Benefits: Contributions to pension plans are eligible for tax deductions under Section 80C of the Income Tax Act.**
Financial Independence: Reduces dependency on family members for financial needs.
Compounding Benefits: Long-term investments grow significantly due to compounding.
Types of Pension Plans
Deferred Annuity
Contributions are made regularly or as a lump sum.
The pension payout starts after a specified accumulation period, commonly known as the deferment period.
Immediate Annuity
In India, pension plans are offered by insurance companies, government bodies, and private financial institutions. There are various types of pension schemes in India tailored to meet diverse financial needs and retirement goals. The Government of India also promotes pension schemes such as the National Pension System (NPS) and the Atal Pension Yojana (APY).
Choosing the Best Pension Plan
When considering what is the best pension plan in India, it’s essential to evaluate factors such as:
Fund Performance: Historical returns on the pension plan.
Charges: Fees and charges associated with the plan.
Flexibility: Options for partial withdrawal or annuity conversion.
Tax Efficiency: Tax benefits on contributions and withdrawals.**
Pension plans are crucial for ensuring a comfortable and financially secure retirement. By understanding the various types of pension plans available, such as deferred and immediate annuities, individuals can make informed decisions. By investing in a suitable pension plan, individuals can ensure financial independence and enjoy their retirement years without financial worries.
** Tax exemptions are as per applicable tax laws from time to time.
Disclaimers:
Disclaimers: IndiaFirst Life Insurance Company Limited, IRDAI Regn No.143, CIN: U66010MH2008PLC183679, Address: 12th & 13th floor, North Tower, Building 4, Nesco IT Park, Nesco Centre, Western Express Highway, Goregaon (East), Mumbai – 400 063. Toll free No – 18002098700. Email id: customer.first@indiafirstlife.com, Website: www.indiafirstlife.com. Fax No.: +912268570600. For more details on risk factors and terms and conditions, please read the sales brochure carefully before concluding the sale. Trade logo displayed above belongs to our promoter M/s Bank of Baroda and is used by IndiaFirst Life Insurance Co. Ltd under License.
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