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?

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?