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?

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