Post-retirement is a period when you have to spend your time enjoying your favourite things which you have missed in the busy schedules of the young stage and to stay without stress. But what if you don’t have enough funds to enjoy your retirement? “Make hay while the sun shines” is a popular proverb. So why not take a step now to gradually contribute to building a corpus to give yourself financial support for a prosperous life at your older age. Pension plans are financial tools that help you achieve the desired financial freedom even after your retirement.
Types of Pension Plans in India: 1.Deferred Annuity: In this scheme, either you can pay the premium systematically or as a single lump amount and you will be entitled to a pension after the term period. This life insurance with retirement benefits is a great choice for those who plan their retirement at a younger age. You are tax-free for the premium amount that gets accumulated over the accumulation period. After the accumulation period, you can withdraw 1/3rd of the amount and buy an annuity plan for the rest amount which also will be tax-exempted. 2.Immediate Annuity: This scheme allows only a lump amount investment and the pension begins immediately after that. Your principal amount will be given tax-exemption while the income you incur from this investment will be taxed based on the income at that time, which will be fairly low as you have retired. Most suitable for elder citizens, your nominee can claim the pension in case of your demise. 3. Employee’s Provident Fund (EPF): If you are a salaried employee in a firm or organization, you can contribute a certain portion of your salary to make your financial status secured after retirement. The best part of this retirement fund is that your employer also contributes a portion of your salary. 4. Public Provident Fund (PPF): Not only salaried employees but business magnets and homemakers can take a step to meet their post-retirement financial needs through the PPF scheme. With the flexibility to select a premium amount in the range of Rs 500 to Rs 1,50,000 each financial year, you can save as little or as big as you can for a smooth, happy retirement life. 5. National Pension Scheme (NPS) Managed by the Central Government to ensure a happy lifestyle of senior citizens, the money invested in this scheme will be invested in equity and debt markets. At retirement, you can withdraw a lump amount of around 60% of the total amount and the rest will be invested in an annuity to yield a regular pension. Selecting the best pension plan in India that suits your lifestyle needs some analysis, as mentioned below.
With the right pension plan, you can have the right liquidity to spend your elderly post-retirement life happier and confident! Get into action now and start your retirement planning process!
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April 2022
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