Top #10 Best pension plans in India

Prepare yourself for the retirement phase with the best pension plans your money can buy now. Understanding each product will help you decide better. A retirement is an event that most of us knowingly or unknowingly work towards. A lot of us have a goal of reaching to our retirement earlier so that we can enjoy our life. It technically means the end of regular pay checks or regular source of income. In order to be able to enjoy that phase one needs to have planned things properly.

The word plan plays a crucial role over here. You not only need to beat the current inflation rate but also make sure your portfolio is respectable when you reach there. All this while you have to navigate your way through several financial products available. Though some of them are pretty good and worth investing time and money on, you can avoid a lot of them. We will be talking in details about 10 such plans which will help you in the later stage.

• National Pension Scheme

The National Pension Scheme or NPS has been gaining lots of traction over the past few years and quite rightly so. The scheme which is mandatory for government employees has provided about 10% returns in the past four years. What makes this instrument interesting is the ability to expose some of your investments to equity.

• Employee’s Provident Fund

Employee’s Provident Fund or EPF is one of the most trusted instruments when it comes to retirement planning. Investing in EPF would give you returns of about 8.5% at the current rate. EPF also allow you to avail tax benefits, as they fall under Section 80C.

Unlike NPS, you are not forced to purchase an annuity with the EPF. However, if you switch jobs or have plans for the same, continuing with EPF would be beneficial.

• Exchange Traded Funds

ETFs weren’t available only till recently in India. They are securities which trade on specific indices and allow you to invest in them. You can currently invest in either Gold or Index based ETFs. Regular investing gives you the leverage of cost average and will help you build a corpus for your retirement.

• Equities

If you want to grow your portfolio at a faster rate, there is no escaping from the equity market. Investment options such as stocks and mutual funds have provided the strongest returns in the recent years. It is crucial to find out funds where you can park your money for a longer duration.

• Bonds

Usually, bonds exist for a duration of 10 to 15 years and you can expect returns of 10-12%. These are loans taken by government and companies from you and pay you interest for the same.

• Senior Citizen’s Saving Schemes

SCSS is one of the most preferred retirement schemes available at the current times. The product allows you to gain returns of 8.6% annually and also comes under Section 80C. People close to their retirements or early in their retirements can choose this plan and invest up to Rs. 15 lacs.

• Monthly Income Schemes

Having a monthly income plan during retirement can be quite helpful as you receive income on a monthly basis. You have lots of options to choose from. Be it mutual funds, insurance products or post office schemes. The only difference being, they are not eligible for tax benefits.

• Fixed Deposits

FDs used to be one of the most popular choices for investment and probably still are. However, the returns that they provide have reduced a lot of late due to the falling interest rates. A different interest rate slab for senior citizens means you stand to benefit 0.25 to 0.5% more than the general public.

• Pension Plans

These plans are similar to the monthly income plans, and you can choose between insurance based products, ULIPs or mutual funds. Though the latter has much lower charges, which means you get more value for your money.

• Immediate Annuity

You can opt for immediate annuity plans by insurance companies. However, lower returns of 5-6% annually and a clause which makes your capital used for the purchase of the annuity non-refundable makes it a tough choice. If you are someone who can build his or her own portfolio, you can skip this product.

One can use a blend of these products to plan for their retirements. Each of us has different needs and different financial goals. Thus, a combination of these would help you through your retirement stages.

Source: Top #10 Best pension plans in India

I need to opt for the best pension plan available in India

An insight into selecting the best pension plan available for you in India. A sneak peeks into different aspects that govern them as well.

Pension plans have a pretty simple goal of providing you with regular income post your retirement. To get a steady flow of income post your retirement you need to plan your investments carefully. Let us assume you expect a pension of Rs. 40000 a month on your retirement. Given the standard retirement age of 60 years and normal life expectancy of 80 years, your corpus needs to be Rs. 2.36 crore.

Good financial planning and right investment tools would give your returns of 12% a year. Postretirement the calculation kind of saturates at 8% and this also includes an inflation of 5%. Keeping all these figures in mind and assuming that you are about 35-36 years old, you would need to save approximately Rs 14000 per month. You would need to continue these for the next 24 to 25 years.

If your current expenditure is higher you would need a bigger corpus amount to continue with a similar lifestyle. Higher pension amount on monthly basis translates to higher corpus amount as well. An amount in crores might sound a lot initially, but with the right tools and balance, it is not all that difficult. The following are some guidelines you can use to build your corpus amount.

Early Bird

We often visit restaurants and events during the early bird offer, to prevail better benefits. The same stands for retirement plans as well. If you start early, you would need to put away smaller amounts. Assuming an average return of 12%, someone in their mid-twenties would need about one third less investment as compared to someone in their mid-thirties. To reach an end goal of Rs 5 crore, an individual who is 25 would have to shell out about Rs 8000 per month. The same person would end up with investments of about Rs 24000 per month if they start 10 years later.

Make it a habit

If you make regular investing as a habit, things become much easier for you. First and foremost you get the benefits of compound interest and cost averaging. Regular investing also brings in lots of financial discipline in you. You can always start with smaller amounts and increase the same as and when possible.

Emergency

Keeping aside emergency funds would ensure your retirement plans are not impacted by anything. Hospitalization costs usually burn a hole in the pocket and having a good health insurance plan can take care of that. As a rule of thumb, you need to have at least three months of your salary as emergency funds. It will help you against dire situations such as job loss.

Choose smartly

For pension or retirement plans, people usually play safe and invest in a public provident fund or employee provident fund. There are no second thoughts about the capabilities of these products as they will provide you with 8-9% returns annually. Pension plans being long term goals, adding the right mix of equity based funds will boost that corpus up by a sizeable margin. Equity based funds can easily provide you 12-15% returns annually.

Another such compelling instrument is the National Pension Scheme. This government provided investment option has lots of flexibility and you can expose your portfolio up to 50% with equity. Equity based funds work on the simple concept of higher risk and higher gains. If you have age by your side, it gives you lots of leverage. In the worst-case scenario of the capital market crashing, you have enough time for your portfolio to bounce back.

There are three primary product lines that one can look into for their pension plans. Retirement plans by life insurance companies, mutual fund retirement funds, and National Pension Scheme. Life insurance retirement plans give you a bit more flexibility as you can go conservative with standard plans or aggressive with unit linked plans. Mutual funds have the card of liquidity up their sleeves. But certain retirement funds allow you to use your money only on retirement age.

To get the right balance between them is the key. As you would want your corpus to grow but at the same time take as few as possible.

Source: I need to opt for the best pension plan available in India

What is the best pension strategy and option for under 20 or working professionals?

As a young person standing at the threshold of your career, you may not think too much about your retirement. You would obviously be more excited about the long career lying ahead of you. However, your retirement is a reality and even though right now it seems like a lifetime away, saving for it is mandatory. The earlier you begin, the better it is for you. So what are the best retirement strategies available to you? Should you invest in a pension plan or should you start a PPF account? Take a look at this article to see what your best options are.

Pension strategies for young people

As a youngster under 20, you may still be studying or may have just begun your professional journey. You may still have a few student loans that you are repaying. At such times, is it practical for you to put some money away in a pension plan for your retirement? The answer is a big, fat yes! The logic behind this is simple – the earlier you start, the larger your fund will grow. Let us take a look at some of the pension strategies for young people.

·         Pension plans: The pension plans, also known as the retirement plans, are popular saving tools available from the leading insurance providers in India. The pension plans allow you to save small amounts of money for a long time. Your money is invested in safe market tools and it grows even further. And since a pension plan is an insurance product, it also comes with a death benefit component. So if anything happens to you within the policy period, your loved ones will get the sum assured. Upon maturation, the pension plan gives you a lump sum amount of money and the rest of the accumulated fund is given in parts to you and becomes a regular source of income for you.

·         Deferred annuity plans: As a young professional, you can start investing in a deferred annuity plan which is a kind of pension plan. This allows you to be disciplined about your finances and keep a small amount of money away each month for your future.

·         Investments: Apart from the pension plans, you can also invest some money in mutual funds, PPF accounts and also in post office savings schemes like the NCS. You will be able to save and build up a large corpus which you can use for your retirement as well as for your other life goals such as your wedding, your children’s college fees, etc. You can also use a part of your accumulated corpus later on to buy an immediate annuity plan. An immediate annuity plan is a type of pension plan where you pay a lump sum amount of money after you retire and set up a regular income source for yourself. It therefore is important to start saving early as you can then build up a fund which will aid you in every step of your life.

Things to consider when building up a retirement corpus

Whether you choose to invest in a deferred annuity pension plan or you want to lock your money into a PPF account, there are a few things you must keep in mind. Firstly, you have to work on a tight budget. As a 20-year old, your salary won't be too high. You therefore have to balance your finances in such a way that it is possible for you to put some money away each month. It may be difficult, but it is not impossible. Secondly, do not make the mistake of thinking that your retirement is way too far away. It never is too early to start saving for your future and you too must take stock as soon as possible. This will help you in finding the best pension plan as well as securing your own financial future.

To sum it up

To sum it up, as a 20-year-old, you must start saving in a pension plan or in any other kind of investment to ensure your retirement phase is smooth. Saving money is a good habit and if you begin early, you will become a successful money manager your whole life and that will prove to be very beneficial for you. Good luck! 

Source: What is the best pension strategy and option for under 20 or working professionals?

What are the must-know things while choosing a pension plan for myself?

Rahul was looking to buy a pension plan for himself. He was 42 years old and understood the importance of starting a retirement corpus early on. He did not want to wait till he was too close to his retirement as he knew that would make it difficult for him to build up a substantial fund. So he went shopping for a pension plan. To his surprise though, there were many factors that Rahul found he did not know about the pension plans. It took him a while to do his research and he bought a suitable plan only when he was sure about the clauses of a pension plan.

If you too need some help with the understanding of the pension plans, take a look at this article where we tell you about the main features of the pension plans in India.

Features of pension plans: Things to remember:

Take a look at these important features of a pension policies so that you know what kind of plan you must opt for and why.

·         Types of annuity:  Pension plans offer two kinds of annuity options to choose from. You can have a deferred annuity or an immediate annuity. In a deferred annuity pension plan, you invest small sums of money over a long period of time. The money you put in is saved din a fund and after your retirement, regular payments are made out of this fund. This helps you to have a regular source of income. Deferred annuity plans are very popular types of retirement plans. Immediate annuity plans are types of retirement plans where you pay a lump sum amount of money after your retirement (or when you want the plan to kick in) and you start getting regular payouts immediately after that.This is a good option if you want to invest your retirement bonus or any other large sum of money you may receive and utilise it in your retirement years.

·         Taxation:  You must be aware of the taxation norms before you buy a pension plan. The premiums you pay on your retirement plans are tax exempted under Section 80C of the Indian Income Tax Act. The income that you earn after the plan matures, however, is fully taxable. So you must keep this point in mind before you invest in a good retirement benefit plan.

·         Withdrawal limit upon maturity:  If you invest in a deferred annuity pension plan, then you can withdraw only 1/3^rd of the accumulated amount when the policy matures. This is important to note as many people expect to get back the entire sum along with the interest component. However, this doesn’t happen in pension policies and you have to buy an annuity plan with the remaining amount. Regular payouts will then begin from the annuity plan and you will get a regular source of income thereafter.

·         ULIPs v/s Endowment plans:  Most of the pension plans available from the insurance companies in India are either endowment plans or ULIPs. You have to therefore make a choice between the two before you start the plan. If you have a low risk appetite and do not want to risk your retirement fund in any way, it is a good idea to invest in a traditional endowment plan. If however, you want to take a few risks and look to multiply your returns, you could invest in a ULIP. It is safe to do so as you get a death benefit and a sum assured. A part of your funds are invested in the markets and you stand to earn high dividends from them and get more money for your retirement days.

So as you can clearly see from the points mentioned above, the pension plans in India are varied and come with a lot of features. Understand the plans before you invest. This will help you in getting the most out of your pension policy and you will be assured of a financially strong retirement. The post retirement days are the golden days of your life and you must be economically well off to enjoy these days. So rather than depending on anyone else, take charge right away and pave a golden future for yourself. 

Source: What are the must-know things while choosing a pension plan for myself?

Retirement: Which is the best pension plan for an IT employee in India?

Information technology, or IT, as it is commonly known, is a very lucrative career option in India. As a result, we find many young people opting to become IT professionals. The IT industry offers well-paid jobs, travel opportunities and promises the employees of an overall comfortable life. But is this enough for an employee? Can a mere dependence on an IT job prove to secure every employee’s future? Perhaps not, and this is why every person working in the IT industry must secure his or her retirement years. A good idea is to invest in a pension plan. In this article we speak about the best pension policies in India and how they help the IT professionals. Take a look.

What is a pension plan?

A pension plan is an endowment insurance policy that helps you to build up a corpus for your retirement years. As an IT employee, it is a very good idea for you to start your investments early. If you wait till the last moment, you may end up with very little time to build up as sufficient fund. So start putting in small amounts of money for a long duration and make sure you have a comfortable life even after your salary stops coming in.

The best retirement plans for IT employees

Let us now take a look at some of the good pension plans.

1. HDFC Pension Super Plus Plan: This is a very good pension plan for the young IT employees in India. The HDFC Pension Super Plus Plan is a non-participating ULIP that helps you in building up a safe corpus and also provides the option for your money to grow. The plan offers guaranteed returns, thereby securing your retirement. You can enter the plan between the ages of 35 and 65. The vesting age of the plan is between the ages of 55 and 75. You can pay the premiums annually, semi-annually or quarterly.

1. LIC JeevanAkshay VI: LIC is one of the most trusted names in the India insurance industry. So it hardly comes as a surprise when we list the LIC JeevanAkshay VI as one of the best pension plans. This is a very flexible policy that offers as many as six annuity options. You can start this policy when you are just 30 years old. If you buy the policy for Rs 2.5 lacs or more, you can get attractive rebates as well.

1. Bajaj Allianz Retire Rich Pension Plan: This is another impressive pension plan. It is a deferred pension plan. Being a ULIP, it offers a guaranteed return and a sum assured and also helps to multiply the dividends. The plan is available for a minimum of seven years and a maximum of 30 years.

1. Max Life Forever Young Pension Plan: This is a wonderful retirement plan as it offers a guaranteed return of 101% on all the premiums you pay. You can therefore build up a substantial retirement fund for yourself with the help of this plan. The minimum entry age is 30 years and the maximum entry age is 65 years. The vesting age is between 50 years and 75 years.

1. ICICI Pru Immediate Annuity Plan: This is a single premium pension plan that assures you a secondary source of income. The plan has four payout options and you can choose the one that suits you the best. The annuity is paid till the time the policyholder is alive. After that, the spouse receives the annuity. The minimum entry age is 45 years while the maximum entry age is 80 years. The minimum entry age for the spouse is just 20 years.

As an IT professional, it is your duty and responsibility to ensure that the comfortable life you have today continues even after you retire. You owe it to yourself and your family members. So choose a good pension plan from the options mentioned above and you will be able to secure a wonderful retirement for yourself, your spouse and your other dependent family members. Speak to your financial adviser to see which kind of annuity option to select and what mode of premium payment to opt for. Once you have all the necessary data, just go ahead and purchase the pension plan at the earliest.

Source: Retirement: Which is the best pension plan for an IT employee in India?

How to Lower Your Life Insurance Premiums without Compromising on Coverage?

The Life Insurance Policies  are the must have term plans and are crucial in today’s world as it gives you the financial protection against the unforeseen health situations like sudden illnesses or accident related treatments. Though the term plan gives an array of benefits like protecting you and your family from different health conditions based on the plan chosen and gives the tax benefit, still these come with an inevitable harder side of it, the premium– It is the expense towards protection of the family. 

Premium is the undeniable part of a term plan and is included in the family budget.

Term plans are a no-frill product that insures you for a predetermined period and ensures the financial security of your family in case of unexpected demise of you during the term of the plan. There are certain factors like your age, genetic disposition and your gender which play a role in determining your premium by the insurance companies.

However, there are ways to keep the premium lower without compromising the coverage benefits.

·         Determine your coverage requirement–Selecting a term plan that optimizes your budget and the coverage requirement is very important. Taking a higher coverage will cost you higher premium and many a times basic coverage fits the requirements for most of the people.

·         Avoid unnecessary riders or add-on – Since Riders and add-ons for extra coverage of any kind increases the premium, evaluate carefully the additional coverage requirement.

·         Staying healthy to be eligible for lower premiums – A healthy person has less chance of getting lifestyle diseases like diabetes and heart issues also there is less likelihood of early death.That interprets into lower premiums charged by insurance companies for your term plan. Avoiding smoking and drinking can save you on premium payment as insurance companies charge extra for these unhealthy habits. Prevent obesity as well to get the benefit on your premium.

·         Starting the term plan early in life–When you are young and healthy, the premium is much lower and this remains usually same until the policy term is over. Policy term could span 10, 15, 20 or 30 years. Locking in a higher term could lock your premium to a lower amount. You will get some flexible term plans which gives add-on cover at different stages like marriage and parenthood requirements. These work to your benefit with lower premium if you start those at early stage of life. Also gives the option to increase the coverage as required.

·         Save money on Annual payment option – Insurance companies provide flexibility of payment schedules like monthly, quarterly, half-yearly or annual. But annual payment turns out less expensive overall as the whole amount is paid in one shot and the company saves the repeated administrative cost on it and pass on the benefit to the customers. If there is no budget constraint, then go for an annual payment and save some on your premium.

·         Buying term plan policy online – Buying a policy online is a cost effective alternative for the company as well as for the customers. It reduces marketing, distribution and office work of the insurer since the customer does all the input of information. The saving that company makes in this context passes on to customers, at least partially in the form of reduced premium.

Term Insurance Premium Calculator -

This is the simple and specially designed tool that helps a perspective buyer to determine the premium amount. You can calculate the premium of term plan that you need to pay in order to get insured for a specified sum in case of unfortunate demise of the policy holder. In this way it helps you to compare the plans offered by different insurers and opt for the best suited one. To get a term plan online and to avail all the benefits of an online policy purchase, this calculator is the most used and appropriate tool for comparing the different insurers on a single common platform in India.

The premiums decided by the insurance companies depend on the rating and underwriting methods of various factors and parameters of individual companies. It is a good idea to shop for the benefits and coverage and comparing the premium for the different term plans offered by companies before purchasing one. Additionally, you need to compare the insurer performances regarding their customer service records, claim settlement procedure and timeline as well as the overall rate and reputation of the company.

Source; How to lower your life insurance premiums without compromising on coverage?

BEST AGE FOR INVESTING IN PENSION SCHEMES – CLICK2COVER

Do you know what pension plans are designed for? Yes, they are solely designed for your retirement planning. Pension plans provide you with a promise of income inflows for your entire life. This way, when you retire, you do not have to worry about your income coming to a standstill. Pension plans are, therefore, a good tool for retirement planning, aren’t they?

Yes, they are and that’s why you should have a pension plan in your financial portfolio if you want to plan for your retirement. But, do you know when you should buy a pension plan? Since retirement is perceived to be a long period away, we delay in investing in a pension plan. But, is the delay good?

What if I tell you that though your retirement is far away, you should start planning for it right now? Yes, you heard me right. Retirement planning is an essential financial goal, one which you should start at the earliest. Want to know why? It is because of the following two reasons:

·         The miracle of compound interest – if you remember your math lessons correctly, you would know what I am talking about. Compound interest lets you earn interest on any interest you have already earned. Confused? Don’t be. Through the process of compounding, any interests you earned on your savings get added to your invested amount which is again eligible to earn future interests. Due to this compounding feature, if you make investments over a longer period, you can accumulate a good corpus. For this to happen, you need to start saving early.

·         Affordable savings – when you start investing in pension plans from an early age, you can make small affordable investments to accumulate a substantial corpus. Since compounding works on your investments, such small investments made over a long tenure can yield very good returns and give you a huge corpus.

Let us understand these points with a simple example:

Suppose you are 30 years of age and want to invest in a pension plan which you would require on your retirement at age 65 years. If you make monthly contributions of Rs.2000 for 35 years, you get a corpus of Rs.28.49 lakhs (approximately) or Rs.29 lakhs at an interest rate of 6% per annum. Now, if you were to start investing in a pension plan sometime in your 40s, let’s say at 45 years, and want the same corpus, do you know how much you would have to save every month? Rs.6300 (approximately), almost three times the original savings. Imagine!

This is what saving early implies. Investing in a pension plan at younger ages is, thus, advised so that you can accumulate a good corpus and that too by making small and affordable savings.

So, one thing is certain. You should start buying pension plans when you are young. But when we talk about the best age, what should it be? Let’s find out:

In your 20s

20s is the period of fun, frolic and merriment. Graduating from college and getting that new job brings in financial independence and you are too busy fulfilling your various dreams. At this age, pension plans take a backseat. Even then, after fulfilling other priorities, you must endeavor to invest in pension plans even when you are in your 20s so that you can get a good corpus on retirement.

In your 30s

This phase is a serious retirement planning phase. Despite planning for children’s future and creating assets, you should start saving small amounts for your retirement planning. For your affordability, you can start saving small amounts monthly towards a pension plan and later supplement your savings through another plan.

In your 40s

Investments in pension plans should be aggressive at this stage. If you had already started saving in your 30s, you can make small contributions but if you still haven’t bought a pension plan it is time you wake up. Buy a pension plan today and start your investments.

In your 50s

A phase where retirement planning takes the center stage, isn’t it? In this stage you should supplement your retirement investments by buying other pension plans. If you have already invested in a plan, stay invested.

In your 60s

With retirement round the corner, you should simply sit back and watch your investments yield returns. You can invest in immediate annuity plans whereupon you would get annuity payouts instantly. Find the best pensionplans in India with single premiums for this purpose.

Retirement is a golden phase which can be enjoyed if you have made financial provisions for it. Pension plans should be bought at the earliest for the maximum possible benefit. If you are dilly-dallying your retirement planning, take heed of this advice and start planning your retirement today.  

Source: BEST AGE FOR INVESTING IN PENSION SCHEMES 

Choosing the Right Retirement Plan for Your Golden Years

Do you know why retirement is termed to be your golden period? It is because during this period you are free from most of your life’s liabilities. You have enabled your children to stand on their own feet, created sufficient assets for your family and taken care of your family’s expenses. Now, you have a responsibility only to yourself, a responsibility to fulfill your dreams and live life carefree. But can retirement be carefree if you do not have sufficient funds to live out your years?

No it cannot be. Retirement cannot be golden if you have no funds to meet your expenses. To create such retirement funds pension plans help. Pension plans are life insurance plans which promise a regular payout from a specified date (of your choosing) till you are alive. So, pension plans provide you a regular income in your retirement. But, do you know how to choose the right pension plan for your retirement?

Choosing a correct pension plan is important if you want to live out your retirement peacefully. Here are some factors which would help you to choose the best pension plan for yourself.

·         Plan type

Pension plans come broadly in two variants. One is the deferred annuity plan and the other is the immediate annuity plan. Deferred annuity plans allow you to accumulate your retirement corpus over a period by paying premiums. You can then use this corpus to avail annuity throughout your lifetime. Immediate annuity plans, on the other hand, start paying annuity immediately after you make a lump sum payment onetime. If you are young and have time to create a corpus, you should opt for deferred annuity plans. On the contrary, if you are retiring soon and want annuity payouts immediately, choose immediate annuity plans.

·         The returns

Deferred annuity plans can be traditional pension plans which pay a guaranteed addition or bonus during the plan tenure. They can also be Unit Linked Insurance Plans (ULIPs) which invest your premiums in market-linked funds. Traditional pension plans pay very conservative returns while ULIPs provide attractive market-linked returns which are also adjusted for inflationary trends. So, you should preferably choose unit linked pension plans for a better return.

·         The term

In case of deferred annuity plans, you are required to pay premiums over the plan tenure which accumulates into a corpus. Choose higher plan tenure to create maximum savings in your retirement corpus. Ideally, you should buy a deferred annuity plan when young (in your 30s) and continue it for as long as you can. When the pension plan matures, buy a single premium deferred annuity plan to receive annuities from a future date.

·         Types of annuity payouts

In immediate annuity plans, you get multiple choices of annuity payouts. There is increasing annuity, annuity where the purchase price is returned on your death, joint life annuities where annuity payouts continue even after your death if your spouse is alive, etc. Among all these types, you should choose the one which would be suitable for your requirement. If your spouse is alive, opt for joint life annuity payouts so that your spouse’s financial security is ensured even after your death. If you want to leave a legacy for your children, the return of purchase price is a good option. Increasing annuity is good if you expect your expenses to increase over time. So, choose a payout solely based on your requirements.

·         Compare

The last consideration is comparing the different annuity plans available in the market before you settle on one. Go online and compare between the available pension plans. Understand the plan features, compare the annuity rates and then buy the plan.

Pension plans secure your retirement financially if you have ensured to buy the best pension plan. For choosing the best pension plan you do not have to do a lot of work. Just remember the above-mentioned points and then compare the plans which are available. Comparing is essential for choosing the best pension plans whether it is the best single premium pension plan, immediate annuity plan or deferred annuity plan. So, what are you waiting for? Now you know how to choose the right pension plan, don’t you?

Source: Choosing the Right Retirement Plan for Your Golden Years

How much money do you need to meet your retirement needs?

Retirement is an inevitable phase of life. When in the age of 20-30s, it is just a thought but as you near towards 40s, this thought starts gaining importance.

Financial planning plays a key role in achieving your retirement goals and aspirations. After retirement, you would have a desire to travel to different parts of the world or pursue your gardening hobby which you could not take up due to time/money constraints.

Calculate your retirement needs

While doing retirement planning, one question which always matters is what will be the capital/corpus amount with which you want to retire. Though answer to this question is not easy as corpus funds is more tailor-made figure and varies from person to person. It depends on the standard of living and lifestyle of the person. 

Suppose you have a current expense of Rs.50,000/- a month. Extrapolate it with inflation at an average rate of 6% at the end of 20 years (assuming you are 40), you will need Rs.1,60,000/- for monthly expenses. Add in the inflated medical costs minus the current obligation like loan and children’s education, you will still need a corpus of Rs.3.84 Crore.

If you go by this, accumulating such a huge corpus fund is very tough since expenses like EMI’s, children’s education, household and medical expenses form a big chunk of your salary. The answer to this worry is to buy a pension plan.

These plans  are annuity plans which provide you fixed amount every month, quarter, half yearly or yearly as per the terms of the policy.

It  help you secure your retirement in a secure way. It gives you the freedom to choose where you want to invest your money. The money can be invested in debt/government securities (traditional plans) or in equity market (ULIPs).

There are two phases in a pension plan, accumulation phase and annuity phase.

In the accumulation phase, the policy holder pays premium to the insurance company every year and in the annuity phase, the policy holder enjoys fixed income from the insurance company which will be received at frequent intervals.Opting for the best retirement plan India has become a significant aspect of every one’s life.

Benefits of buying a pension plan are:

Ø  Source of regular income

As there will be no paychecks post retirement, pension plans give a boost to the policy holder’s saving by providing regular income.

Ø  Tax Advantage

The premiums paid for traditional pension are eligible for exemption u/s sec 80CCC of the Income tax act.

Ø  Insurance cover to policy holder

The main purpose of these plans  is to help you build a capital fund so that it can provide you a steady income after retirement. However, few insurance companies provide you insurance cover too. In case of untimely death of the policy holder, a sum assured is given to the nominee of the policy holder.

Ø  Easy to buy

With the ease of buying pension plans online, you can compare among the various plans provided by insurance companies and opt for the one which suits you the most. Customer assistance is available around the clock all 365 days of the year.

Ø  Compounding benefit

Investment in pension plan helps you enjoy the benefit of compounding as your money is constantly invested so that the corpus funds are enhanced.

Ø  Flexibility in terms of investment

This plan provide you the flexibility to invest your money in government securities or ULIP’s or a balanced fund which is a mix of traditional pension plan and ULIP.

Few points should be kept in mind while choosing an annuity plan:

Ø  Your present age

If you are in 20-30 age group, then you have time to accumulate the corpus fund. However, early investment always reaps good return as it has adequate time for compounding.

Ø  Revisiting your financial plans with time

Accumulation of corpus fund is an estimated figure. Over time, you should revisit the amount and see if there is a need to revise it as per the current inflation and market conditions.

Ø  Take into account your industry

You might be working in an industry which is fragile by nature. Unusual events like a job loss could impact your investment decisions.

Ø  Take help from a financial planner

As financial planning helps you achieve your desires, in case of any doubt, do not hesitate to consult a financial planner who will enable you to attain your goals.

Source: How Much Money do You Need to Meet Your Retirement Needs?

How to go for the right annuity plan?

Retirement is considered as second innings of life. In the first innings, a person strives to fulfill his career aspirations and is busyin taking care of his responsibilities towards his family. He has set financial obligations like EMIs, children’s education and works hard enough to achieve them. Once he retires, he starts living for himself. The unfulfilled dreams like going on a vacation or serving the society takes a priority. To fulfill these aspirations, one should start planning for retirement as soon as possible. The best practice is to start investing from the time you start earning.

Post retirement, the regular pay checks will no longer exist. The most important concern becomes to maintain your lifestyle. Though you might have savings in your EPF (Employee Provident Fund A/c), but it could be inadequate as the contribution is restricted to 12% of your basic salary every month. Taking a plan is undeniably a must for securing your retirement.

What is a Pension Plan?

It is annuity by nature which gives the policy owner a fixed sum of money at regular intervals. These intervals could be monthly, quarterly, half yearly or yearly.

Who is eligible to take this Plan?

Every individual is eligible to take a pension policy. However, it is restricted to a maximum entry age of 35-75 years. This restriction varies for different insurance companies.

Are pension plans divided into phases?

Yes, They  are divided into two phases. One is the accumulation phase in which the policy holder pays a lump sum amount or regular payments during which the wealth is accumulated. Other is the annuity phase in which the policy owner enjoys the accumulated wealth by getting a fixed sum of money every month.

What are the types of pension plan?

Broadly, pension schemes can be categorized as below:

1.       Deferred Annuity

2.       Immediate Annuity

3.       With or Without life Cover Annuity

4.       National Pension Scheme

Let us explain one by one the above types :

1.       Deferred Annuity

In this, you will have to pay a fixed amount at every interval generally, once in a year. You can also opt for single premium plan wherein you pay a lump sum amount at the time of taking the policy. Tax benefit can be availed on the premium paid under this plan.

1.       Immediate Annuity

As the name goes, the pension will begin immediately. For the purpose of availing immediate annuity, you will have to pay huge sum of money. In case of unusual event like demise of the policy holder, the annuity will be paid to the nominee.

2.       With or Without life cover annuity

In pension plans with life cover,a sum assured is paid to the nominee in case of untimely death of the policy owner. This cover is provided on deferred annuity plans during the accumulation phase.

In case of without cover annuity plans, no sum assured is given to the nominee in case of death of policy holder. However, the nominee receives the accumulated premiums paid by the policy possessor.

3.       National Pension Scheme

This scheme is introduced by the government of India and is being managed by PFRDA (Pension fund regulatory and development authority).  It is a voluntary scheme in which all citizens of India can invest.

With so many options available in the market for pension , it becomes a cumbersome job to opt for the best plan. If you have not planned for your retirement yet, you should opt for the best single premium pension plan in which you are required to pay the premium only once and enjoy complete pension benefits in the annuity phase.

Benefits of opting for Single premium plans are:

•     Beneficial to those who don’t have a stable cash inflow or fixed income
•      No need to remember the premium dates for renewal
•     Good for seasonal business owners

The tax benefits of single premium policies are in line with regular plans. The premium paid and maturity benefits are exempt under the income tax act. However, the premium paid should not exceed 20% of the sum assured. In case the premium exceeds 20% of the sum assured, the balance amount will not be allowed as deduction under the income tax act. Also, the maturity benefit cannot be availed.

Source: How to go For The Right Annuity Plan?

How to Handle Retirement Investment Smartly?

What is retirement? Is it simply taking a permanent break from work or does it also mean absence of income?

Retirement is a phase when, after working for most of our adult lives, we bid adieu to work. It is the phase when we are free to indulge in our dreams and wishes. It is a phase which is rightly called the golden period because we are free from most of our life’s responsibilities. But, can retirement be our golden period if we have not planned for it?

Planning for retirement basically means building a sound financial corpus which would take care of our expenses post retirement when our income stops. Therefore, we invest in various financial instruments to build a retirement corpus. But do we handle our retirement investments smartly?

Most of us don’t. Handling your retirement investments smartly requires following some basic principles. Do you know what these principles are? No?

Read on:

Ø  Ascertain your retirement requirement

Before you plunge into the investment pool to invest for your retirement, stop and take stock of your requirements. Find out the expected expenses and income after you retire. Your expected expenses should be determined based on the current inflationary trends. After you estimate your expenses, estimate the required investment which would be sufficient to fund your retirement.

Ø  Research

There are many investment instruments available in the market and you should research the various instruments to find the best one for yourself. Do not blindly copy the investment practice of your peers or relatives. Do a detailed research yourself weighing the pros and cons of all available investment instruments.

Ø  Invest in a pension plan

Pension plans offered by life insurance companies offer the perfect solution retirement planning. These plans provide annuity payouts throughout your lifetime. These annuity payouts can help you in meeting your expenses post retirement easily.

The last point must have caught your attention. You must be wondering how, from a varied pool of investment instruments, pension plans would help in handling your retirement investments smartly. Well, wonder not. Here are the ways in which pension plans are synonymous with smart retirement investments:

Ø  Pension plans earmark an investment for retirement

Compared to other investment options which can be withdrawn as per requirement, pension plans provide annuity payouts only. Though 1/3^rd of the accumulated investment can be withdrawn, the remaining 2/3^rd is compulsorily paid as annuity instalments. Thus, investment in pension plans ensures a regular stream of income which can be availed as per your requirements.

Ø  Pension plans pay annuity throughout your lifetime

The best part of these plans is that the annuity payouts continue till your entire life. You can choose the Vesting Date (the date from which you start receiving annuity payouts) and the payouts continue till you die. What’s more, there are joint annuities too which pay annuities even after your death if your spouse is alive. Which other investment has this feature?

Ø  Pension plans also come as Unit Linked Plans

Your investment should grow in tandem with economic inflation. Unit Linked Pension Plans invest your premiums in the capital market promising returns in tune with economic growth and inflation. Thus, these plans ensure annuities which are sufficient to take care of your post-retirement expenses.

Ø  You can choose a plan of your liking

Pension plans are of two types. There are deferred annuity plans wherein, first, you accumulate the corpus by paying premiums. Later, when the plan vests the annuity payouts start and continue lifelong. Then there are immediate annuity plans wherein you pay a lump sum money and start receiving annuities immediately from the following month, quarter, half-year or year. So, these plans are flexible. You can chose to invest in them over a specified period to build a retirement corpus or avail a lifelong annuity by investing in the best pension plans in India with single premium option.

Retirement puts a stop to your income but not your expenses. Handling your retirement investments smartly is essential if you want to have a comfortable retired life. Pension plans form an important aspect of this smart planning and should be included in your financial portfolio. 

source: How to Handle Retirement Investment Smartly?