Pension or retirement plans, a subset of investment plans, are especially created to meet your financial demands and expectations after retirement. With the help of these plans, you may pay for any unanticipated medical crises as well as your daily expenses. By making regular investments during their earning years, one can simply protect their financial future with the aid of retirement plans. It not only enables you to deal with inflation without sacrificing your standard of living but also makes you financially independent.
The insurance sector in India currently provides some of the best pension plans for you to lead a secure life after retirement. So, are you looking ahead to lead a better life even after your retirement? Well, we can certainly help, though! This article will give you an insight into the top pension plans that one should think about investing in.
What is a Pension Plan?
A pension or retirement plan is a form of investment strategy that aids in the long-term accumulation of funds for a stable financial future. It guarantees a consistent income after retirement and aids in coping with post-retirement uncertainty. A pension plan is essential even if a person has a good amount of savings.
A pension plan enables you to build a long-term financial cushion to ensure a secure financial future after retirement. The insured amount in a retirement plan must make a set amount of regular contributions up to retirement. The cumulative sum is periodically paid back to the insured as a pension or annuity. Pension plans safeguard a person’s financial security after retirement and aid in preparing for unforeseen circumstances.
Savings quickly run out and are occasionally needed for emergencies. Therefore, it is crucial to pick the finest pension plan in order to ensure that you will have enough money after retirement to cover your basic living expenses. When you consistently contribute to a pension plan, the money grows due to the power of compounding, which significantly impacts your eventual savings corpus.
Top 6 pension plans in India 2022
Company Name | Plan Name | Type of Plan | Entry Age | Maturity Age | Policy Term | PPT |
LIC | LIC’s New Jeevan Shanti | Non-linked, Deferred Annuity | 30-79 years | 31-80 years | NA | Single |
HDFC Life | HDFC Life Click 2 Retire | Market-linked | 18-65 years | 45-75 years | 10-35 years | Regular, Limited, Single |
SBI Life | SBI Life Saral Retirement Saver | Traditional savings | 18-65 years | 40-70 years | Max: 40 years | Regular, Single |
ICICI Pru | ICICI Pru Easy Retirement | Market-linked | 18-70 years | 31-80 years | 10-30 years | Regular, Limited, |
Max Life | Max Life Guaranteed Lifetime Income Plan | Immediate/Deferred Annuity | Immediate Annuity: 0-80 Deferred Annuity: 45-80 years | 46-90 years | NA | Single |
Bajaj Allianz | Bajaj Allianz LongLife Goal | Market-linked | 18-65 years | 99 years | 99 minus entry age | 10 – 25 years |
Let’s have a brief introduction to the top 6 pension plans in India:
LIC New Jeevan Shanti Plan
The LIC New Jeevan Shanti Insurance Plan delivers returns through Deferred Annuity choices and is a non-participatory, non-linked, single-premium payment plan. This policy is available to you both offline and online. The Joint Life Annuity and the Single Life Annuity are the two payout options for a Deferred Annuity under this plan.
Key Features:
You can access a steady source of income by making a one-time investment.
In accordance with the plan, policyholders may purchase additional coverage for dependents who have disabilities.
The plan provides an annual premium rate discount.
Four premium payment modes are available to policyholders: monthly, quarterly, half-yearly, and annual.
HDFC Life Click 2 Retire Plan
The HDFC Life Click 2 Retire insurance plan is a unit-linked online insurance plan that helps the insured with post-retirement needs while providing market-based returns.
Key Features:
The plan provides a death benefit that would be higher than the fund value or by 105% of the paid premiums.
The plan provides vest benefits, and no premium allocation fees may be assessed.
Section 80CCC of the Income Tax Act of 1961 allows policyholders to take advantage of tax advantages.
SBI Life Saral Retirement Saver
This individual, non-linked, participating pension product is based on savings. The SBI Life Saral Retirement Saver program aids policyholders in establishing a source of retirement income.
Key Features:
Simple reversionary bonuses frequently added over the policy term might be used to create a corpus.
SBI Life’s Preferred Term Rider is available for Life Cover.
Policyholders are eligible for both maturity and death benefits.
Section 80CCC of the Income Tax Act of 1961 allows policyholders to take advantage of tax advantages.
ICICI Pru Easy Retirement Plan
Through stock investment opportunities, ICICI Pru Easy Retirement aids in giving the Insured a consistent source of income.
Key Features:
The plan offers several payment frequency options, including monthly, biannually, and annually. Premium payments can be made annually, quarterly, or monthly.
The death benefit is equal to 105% of the sum of the premium.
Policyholders who have this pension plan can lower their taxable income.
Max Life Guaranteed Life Income Plan
Max Life Guaranteed Life Income Plan is a classic pension plan that aids policyholders in saving money for a steady income after retirement.
Key Features:
As long as you and your spouse are alive, the plan continues to provide a pension.
The plan pays the nominee the entire purchase price in the event of the insured’s death.
Pension payments might be made monthly, quarterly, semi-annually, or annually.
The plan provides six different Annuity options.
Bajaj Allianz LongLife Goal
Unit-linked, whole life insurance from Bajaj Allianz LongLife Goal enables you to save and generate income up to age 99.
Key Features:
The program guarantees assured loyalty increases.
Until age 99, policyholders are guaranteed an income stream.
Periodic charges for the return of Life Cover are also advantageous to policyholders.
Policyholders can take advantage of tax benefits under Section 80C and Section 10(10D).
Factors to consider before buying a pension plan in India
The following factors must be taken into account before you purchase a pension plan in India:
Monthly Expenses: It’s crucial to consider monthly expenses while buying a retirement plan. The regular source of income is discontinued after retirement. As a result, it’s crucial to establish a financial foundation to support the family’s monthly expenses. In addition to the monthly costs, it’s critical to save aside enough money for unforeseen financial situations after retirement.
Inflation: When choosing a pension plan, it’s necessary to consider the rising rate of inflation and determine how much corpus will be needed to maintain a comfortable standard of living after retirement.
Life Expectancy: Accurately predicting a person’s lifespan is impossible. In order to satisfy your financial demands in old age, your retirement fund should be sufficient even if you get the greatest pension plans.
Medical Expenses: Young individuals frequently have a tendency to overlook their potential medical costs. When one becomes older, one might have to spend a fortune on medical exams and treatments. As a result, your pension plan must give you access to enough money to cover any kind of medical emergency.
Assets and Loans: You should also consider your present assets and outstanding loans while choosing the finest pension plans. If you have any unpaid loans, make sure you make the required payments on time. If you don’t pay back the loan(s) on time, it can take away a chunk of the annuity income.
Know Your Financial Needs: You need to know how much money you’ll need after retirement to support yourself and your dependents.
Do Proper Research: Conduct research to fully grasp the pension plan’s terms and conditions and carefully read them. The pension information in the pension plan will include specifics on your income’s periodicity, how much of it is guaranteed, and how much is based on market performance, among other things.
Find Out the Different Products Available: The market offers a variety of retirement plans. List the policies that will meet your financial expectations and then move ahead.
Eligibility criteria for getting a pension plan
The following eligibility criteria must be met to get a pension plan:
Entry Age: Once you reach a specific age, you can buy a pension plan. The minimum age for a pension plan is typically 18 years old, although other insurance plans have different age ranges. However, the entry age for these plans is 30 years for some businesses. Similar to this, the pension fund has a maximum entry age. It is typically approximately 70 years.
Premium: Payment of a minimum premium is required for the policyholder to enroll in a pension plan. This is so that the pension can be obtained per the premium the policyholder has paid.
Vestige Age: The age at which the policyholder begins to receive a pension is known as the vesting age. It is typically fixed at 40 years. It may reach the insurance company’s set maximum.
Salary: Salary is another eligibility factor that must be met to get a pension plan. You must have a stable salary slab for getting a pension plan so that you can pay the premiums on time. A minimum salary of 3 lakh per annum is required.
The bottom line
Even though each plan has a unique set of advantages, it’s crucial that you know your needs. The pension amount should be greater than all of your possible expenses put together. Especially if you are currently the only wage earner in your family, have debts to pay off, or need to make plans for your children’s future education.
Market-Linked Investment options have greater purchasing costs, but larger corpus guarantees are more possible with these plans. However, a typical Savings/Annuity plan is a wonderful place to start if you are risk-averse and want to be protected from market volatility.
However, the most important factor should be to live a life free of debt after retirement, and the ideal alternative is the one that allows you to achieve your long-term objectives.
FAQs
An annuity is a recurring payment you get from your pension plan when you retire. The annuity can be used on a monthly, quarterly, half-yearly, or annual basis.
An online retirement calculator can help you with that. You need to put the following details in the calculator, which will summarize an ideal corpus. Present cost of living (monthly expenses) Inflation rate Retirement age Number of years you expect to live post-retirement.
Yes, it is possible to buy multiple pension plans from different insurance companies.