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?

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