Home National Reduce your Financial Burdens with these Pension Plans in India

Reduce your Financial Burdens with these Pension Plans in India

Reduce your Financial Burdens with these Pension Plans in India

Retirement planning is an essential part of personal and financial planning in the life of an employed person. It should be up to you to decide what you want to do with your life. Hence, retirement planning will pass the steering of your post retirement in your hand to lead the way in the direction of your liking.

Someone giving up control of their life because they are retiring would be unfair. Old age physically debilitates a person. Financial instability will also exacerbate one’s burden and concern after retirement. Financial freedom should be one’s top priority in order to live life on one’s terms and independently after retirement.

Ergo, keep reading to reduce your financial burdens with the following pension plans in India.

National Pension Scheme (NPS)

One of the two types of pension schemes employed by the Indian government is the National Pension Scheme (NPS). The National Pension Scheme offers the option to invest in equities and debt funds based on the investor’s risk tolerance. Investors in this pension plan are permitted to withdraw up to 60% of their financial assets after retirement, with the residual 40% being used to buy annuities. There are usually two kinds of National Pension Scheme accounts: the All-Citizen Model and the Corporate Model.

Employee Provident Fund

One of the few pension plans in India that is supported by the Indian government is the Employee Provident Fund. Employees’ Provident Fund Organization (EPFO) oversees Employee Provident Fund. Both Hindu Undivided Families (HUF) investors and salaried workers have access to Employee Provident Funds. Investors in the Employee Provident Fund are expected to contribute a predetermined portion of their base wage. The current rate for the same is 10% to 12%. The investors receive the accumulated funds at retirement, along with interest earned.

Deferred Annuity

The subscriber of a deferred annuity retirement plan may decide to boost wealth by making a one-time payment in full or by making premium payments over a certain length of time. The beneficiary will start receiving their pension funds after their policy’s term is up. Only one-third of the withdrawal from the fund is not subject to taxes. The remaining two-thirds of the fund are taxed.

A Deferred Annuity retirement plan locks the collected value, making it difficult to access in an emergency. Due to the premium payment made into sustaining funds, salaried employees are more likely to favour this type of retirement plan.

Immediate Annuity

The beneficiary of an immediate annuity retirement plan can begin collecting the pension funds right away. The beneficiary will pay a lump sum and start receiving the annuity based on the amount they have invested. Beneficiaries of an immediate annuity plan can choose from a range of annuity alternatives.

The premiums paid for an immediate annuity retirement plan are exempt from taxation under the Income Tax Act of 1961. In the event of the policyholder’s demise, the nominee remains entitled to the pension for the duration of the policy.

Pension Funds

In India, pension funds are long-term plans that provide greater returns when the policy reaches maturity. The Pension Fund Regulatory & Development Authority (PFRDA) oversees pension funds. Only six fund institutions in India are now permitted to sell pension funds. Investors have the option of making a single large investment or several smaller premium investments which will guarantee an income source after retirement. Pension funds are a great tool for retirement planning in India.

Unit-linked Insurance Plan or ULIP Plan:

Unit-linked Insurance Plan is among the finest pension plans in India. These are widely popular means of retirement planning due to their dual benefit. They offer investment as well as insurance options to investors. The corpus accumulated with a Unit-linked Pension Plan or ULIP offers financial security and stability to the investors.

Unit linked Insurance Plan offers life cover,i.e., in the event of the policyholder passing, the assured sum is transferred to the nominee of the policy. In the event the Unit-linked Insurance Plan or ULIP matures while the policyholder is still alive, they receive the maturity value of the Unit-linked Insurance Plan or ULIP. Furthermore, under Sections 80C and 10D of the Income Tax Act of 1961,Unit-linked Pension Plans are exempt from taxation.

Final Thoughts

In India, pension plans offer retired people a variety of options and strategies to help them prepare for retirement. Retirement is no longer regarded as a burden. Even after retirement, you can still lead a self-sufficient life while achieving your financial goals and having financial freedom. For a stress-free retirement, you have a variety of pension schemes in India available both online and offline. Although you may evaluate and choose the finest plans for you, it is essential that you carefully read the terms and conditions before investing in any pension scheme.


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