A pension plan also is known as a retirement plan where a person invests a few percentages of their income to accumulate over a specific period. The sole purpose of the investment plan is to provide financial security to people after retirement. An emergency is inevitable and it is possible that a person can run out of savings so having the best plan helps to ensure a person and make their lifestyle easy after retirement.
Why Do We Need Pension Plans?
People don’t overlook the benefit of the pension plan and not consider much on what happens if they stop working, a good retirement plan isn’t something which means it can be only fruitful when we get older, it’s peremptory to start acting today itself.
Type of Pension Plan Scheme in India
A good retirement can only be felt when there is a good retirement scheme which is trustworthy, there must be a benefit, and the types of plans are described below:
- Immediate Pension: Pension is immediately provided to the policyholder but before it, one needs to pay a lump sum amount and the pension plan starts. If the holder of a pension dies, the nominee will be entitled to get money.
- Deferred Pension: In this scheme, one can enjoy the tax benefit and will get the pension till the end of the accumulation phase.
- Without or With Cover Pension Plans: Under the cover pension, the lump sum amount is assured to the nominee of the policyholder in case of his/her death but under without cover pension, the amount is not guaranteed to the nominee. Although all the premiums are paid back to the nominee.
- Pension Certain: Under this the policyholder will be paid for a specific number of the year now it’s up to policyholder when they want to start their pension, and if they die before receiving the remaining amount then it will be transferred to the nominee
- Pension with the Guarantee Period: As the name applies guarantee, the pension is provided to the policyholder for a certain or specific period of the year like 10 years or 12year. In this, the policyholder survives or not doesn’t matter.
- Life Pension Plan: Under this scheme, the pension will be provided to the policyholder till death, and after death, if the person has nominated the spouse then the pension amount will be provided to the spouse.
- National Pension Scheme: This plan is started by central Govt. in 2004 Jan, in this employee of private, public, and unorganized sectors can invest in this program the only exception of armed force. In this scheme, a person can invest in the account of pension for a particular interval of time during they are employed, in between, they also have the option to withdraw the amount, and the remaining amount will receive as their monthly pension after the retirement.
Top Performing National Pension Schemes
- LIC Pension Fund Tier II
- LIC Pension Fund Tier I
- HDFC Pension Fund Tier I
- Kotak Pension Fund Tier I
- Birla sun life pension scheme tier I
Benefits under National Pension Schemes
- The maximum deduction is up to Rs. 1.5 lakhs can be claimed in NPS under section 80c of the Income-tax Act.
- A person cannot withdraw the entire amount after retirement.
- A person can make a withdrawal up to three-times within 5yr of interval in entire tenure.
- An individual can withdraw 60% of the funds after retirement and 40% of the fund will be receiving as a regular pension.
- After the completion of three years of a national pension scheme, an individual can withdraw 25% for a specific like medical treatment, marriage, buying property, higher education, etc.
Top Ten Pension Plan Scheme in India
SBI Life Saral Pension Plan
This scheme offers a guaranteed bonus for the starting 5 years, the minimum premium we have to pay is 7,500py and no limit in maximum. The minimum age is 18year and the maximum age 65year.
HDFC Life – Click 2 Retire
The minimum age to start this scheme is 18yr and the max is 65 years, and the minimum maturity age is 45 years, and the minimum is 75 years we can also get tax benefits under section 80C and 10 (10A) of the Income Tax Act of 1961.
Reliance – Smart Pension
We can choose a policy tenure of 10 and 30 years, minimum maturity age is 45 years and 75 years, receive guaranteed loyalty additions, also get double benefits of equity participation and capital guarantee.
HDFC Life – Assured Pension Plan
The minimum age is to start 18 years and the maximum age 45 years, these plans offer guarantee vesting benefits along with market revenues, this plan comes it a unique and limited payment option.
Bajaj Allianz- Pension Guarantee
The minimum age to get this plan is 37 years and the maximum is 80 years, the minimum purchase price is 25000 rupees where there is no limit of maximum.
ICICI Pru-Easy Retirement
The minimum age is to get 35 years and the maximum 70 years and the minimum premium amount is 48000 rupees per year.
Max Life Guaranteed Lifetime Income Plan
In this we can choose pension receiving time like monthly, quarterly, semi-annually, or annually basis, also we can opt for a one-time lump sum payment for the investment in the policy.
Pradhan Mantri Vaya Vandana Yojana
There is no maximum age limit to get this pension scheme, we will get maturity benefits, this scheme is purchased of rupees 1.5 lakhs to 7.5 lakhs for monthly pension, and the payment can be made through NEFT or any other mode where the Aadhar is linked.
Birla Sun Life Empower Pension
The minimum age to get this plan is 25 years and the maximum is 70 years, it also provides a regular premium paying option, the tax benefit can be taken under section 80 C of the ITR Act, in this we can choose the desirable fund option as per risk appetite.
LIC Jeevan Shanti
By one-time investment this plan gives a guarantee for life-long income, this plan offers 9 types of annuity options and the loan facility is available after the completion of 1 year.