Pension Plans

We all work hard and save money for one of the key stages of life i.e. ‘Retirement’. It is essential to have enough savings post your retirement in order to sustain your lifestyle the way you’ve always been living. Therefore, “Pension Plan” plays a very important role in your financial planning.

Everyone would like to continue living a lifestyle the way you have been living during your working life, which is why Pension Plans are also known as ‘Retirement plans’. A certain amount of your current income is transferred and stored for your future by your employer. This amount is then given to the employee as pension fund on his/her retirement.

What are Pension Plans?

Pension Plans are known as retirement plans that require you to make contributions into a pool of funds set aside for your benefit in future. This pool of fund is invested on your behalf, and the earnings on the investment generate income on your retirement.

For your retirement plan, there are heaps of pension plans available in the market. These plans are different from each other. Their benefits, features, exclusions etc. are different too. Pension plans are basically an investment or saving tool to provide for your future retirement needs.

All the pension plans are divided into two parts.

The first part is accumulation where you (insured) pays the premium.

The second part is distribution.

Here, you are paid a regular income through an annuity plan after your retirement. Annuity Plan is a type of insurance which starts paying you an income from the start as per the options chosen by you.

The benefit of choosing this investment option i.e. pension plan, is that it provides financial security and stability during one’s golden years. Individuals would not have to compromise on their standard of living after retiring from their respective jobs.

Why we need to start retirement planning?

To ensure a worry-free, quality retired life, one must ensure to plan for retirement well in advance. Retirement planning deals with identifying income sources, estimating the expenses that are going to arise, executing a savings program and managing risk and assets. It must begin long before the individual retires, and the sooner he or she starts, the better. Financial experts often recommend people to begin retirement planning from the day they start earning. Starting early gives them more time for their wealth to grow. A well-chosen retirement plan can help one rise above inflation. Individuals are advised to make use of a retirement calculator to get an idea about how much they will need to save for the kind of retirement they wish to have.

Types of Pension Plans in India

Following are the types of Pension Plans in India.

Deferred Annuity

This pension scheme allows you to accumulate corpus through regular premiums or through single premium over a policy term. Once the policy term is over, the pension will begin. The benefits of deferred pension plans are massive. It also includes tax benefit that is associated with this pension scheme. There is no tax levied on the money invested in the plan unless he/she withdraws it. This scheme can be purchased by making regular or by one-time payment towards it. Thus, this plan suits all types of investors.

Immediate Annuity

In this scheme, pension starts immediately. You have to deposit a lump-sum amount and pension will start immediately on basis of the amount invested by the policyholder. You can choose from a range of annuity options available. Also, the premium paid is exempted as per the Income Tax Act, 1961. And, in case of death of the policyholder, the nominee/beneficiary will be entitled to get money as per the option selected.

A few annuity options preferred by many people are:

Annuity Certain / Guaranteed Period Annuity

The annuity is paid to the annuitant for a specific number of years as per this clause. The annuitant has the right to choose the period and in case he/she dies before exhausting all the payments, the annuity will be paid to the beneficiary/ nominee. As per this plan, annuity is given to the life assured for certain periods like 5, 10, 15 or 20 years whether or not he/she survives that duration.

Life Annuity

As per Life Annuity option, the pension amount will be paid to the annuitant until his/her death. However, if you choose the ‘with spouse’ the amount of pension will be given to the spouse of the policyholder (in case of death).

With Cover and without cover Pension Plans

The pension plans with cover have a life cover component in the plan and states that a lump sum amount will be paid to the family members on the death of the policyholder. The cover amount here is not high, as a major part of premium is diverted towards growing the corpus than covering the risk of life.

On the other hand, without cover pension plan states that there is no life cover. And, in case of an unfortunate death, the nominee/beneficiary of the policy will get corpus accumulated (premiums paid till the date of the death).

National Pension scheme (NPS)

The NPS was introduced by the Government for people to build up the pension amount. However, you can put your savings in the new pension scheme where your money will be invested in equity and debt market as per your preference. Also, you can withdraw 60% of the amount at retirement and rest 40% can be used to purchase the annuity.

Read More About: How Investing in NPS can Help you Save Tax

Note: Maturity amount is not tax-free.

Pension Funds

Investing in Pension funds is a smart option as these plans remain in force for a long time and also offer better returns at maturity. The Pension Fund Regulatory and Development Authority (PFRDA), established by the government body allows 6 companies as fund managers.

Features of Pension Plans in India

Vesting Age

Vesting age refers to the age at which the policyholder of a pension plan starts receiving your monthly pension. In most cases, the minimum vesting age is generally between 40 years and 50 years and is flexible up to the age of 70 years. However, there are a few companies that extend their vesting age till 90 years.

Payment Period

Do not confuse this with accumulation period. This is the period in which you receive the pension after retiring. For instance, if one receives the pension from the age 60 to age 75, the payment period will be 15 years. Most funds keep this separate from accumulation period, though some funds allow partial/full withdrawals during accumulation periods too.

Surrender value

Surrendering one’s pension plan before maturity is not a smart move even after paying the required minimum premium. This results in the investor losing every benefit of the plan including the assured sum and life insurance cover.

Accumulation Duration

In this period the investor pays regularly or once in this period. This is the time when your wealth starts accumulating in order to build a huge corpus. For example: In case you start investing at the age of 25 years and continue investing till the age of 60. Here, your accumulation period will be 35 years and your pension for the chosen period comes from this corpus.

Benefits of Pension Plans in India

Liquidity

A pension plan is essentially a low liquidity product. There are insurance companies that offer pension funds that are designed to enable policyholders to withdraw your pension amount at the time of accumulation stage. This feature ensures that are always prepared for an unforeseen emergency, in case it arises. Most importantly, it prevents you from being dependent on banks for a loan under such situations.

Guaranteed Pension/Income

This serves the purpose of a stable and reliable source of income after your retirement or as per your preference. This enables you to plan in advance, so that you are financially independent even after your retirement. It is recommended that you use the retirement calculator/ Pension Plan Calculator to get a rough estimation of the retirement corpus you need to aim for. For instance, if you want to build a corpus of Rs. 5 crores as your retirement plan, you have to pay your premiums accordingly.

Tax Efficiency

Policyholders of pension plans can avail tax exemptions under Section 80C of the Income Tax Act, 1961. Besides this, there are other provisions for tax benefits as per Chapter VI-A of Section 80C, Section 80CCC and Section 80CCD of the Income Tax Act, 1961. For example, the NPS (National Pension Scheme) and Atal Pension Yojana (APY) are both subject to tax deductions as per Section 80CCD of the Income Tax Act, 1961.

Death Benefit

It carries a guaranteed death benefit. This is the amount that the nominee can avail on the unforeseen death of the policyholder during the tenure of the pension plan, and is generally 105% of the total premium paid till then. It also includes the benefits of top ups that the policyholder may have selected while purchasing the pension plan. For a plan that has been discontinued, the Death Benefit comprises of the accrued funds against the plan.

In the case of the unforeseen death of the pension plan accountholder, the nominee can opt for any one of these 3 options - withdraw 1/3rd of the maturity amount, utilize the entire benefit amount to buy an annuity plan, or choose a combination of both.

Choice of investments

Every ULIP pension plan has varied investment objectives and risk appetites. Some prefer investments that generate high returns within a short time by exposing the portfolio to comparatively high market risks. Short term equity investments are suitable for such investors. In contrast, some others have a low or moderate risk appetite and, therefore, prefer investing over a long term. The type of pension plan you will select will determine the returns you can avail.

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Tips to Choose Right Pension Plans

Minimum and Maximum Investment Amount

You will always find pension plans which carry different limit in terms of maximum and minimum investment. Therefore, it is essential to check your budget before you invest.

Returns

Return is the most important part of any investment. Thus, it is important to choose a pension plan only after you have a fair idea about the returns it would provide. Besides, always remember the rate of return will be low if the returns are guaranteed. So, choose wisely an option which may provide high returns.

Additional Benefits

Nowadays many insurance companies offer additional benefits like life cover, tax advantage, etc. along with the traditional pension plan. Choosing a plan that may offer you additional benefit before you make the final selection. This will, in turn, help you in future.

Liquidity

There are some investment plans which have a lock-in period where you cannot withdraw money at that specific time. However, there are some companies that offer plans with a certain degree of flexibility with regards to withdrawal.

Investment Mix

The Investment Mix part comes into action when pension plans are offered as part of Mutual funds. Therefore, you can always find out investment mix offered by the pension plan.

Tax Benefits

You can save tax on your pension plan to a certain extent. The plans are exempted under section 80C and your contribution is exempted under section Chapter VI-A. Section 80C, 80CCC and 80CCD.

Tax Exemption of Dividend / Interest

You can also look for other factors like tax exemption of the interest or dividend which you’re going to receive in your pension plans. Always remember, most of the pension mutual fund dividends are not exempted from tax.

Keep Inflation in Mind

Inflation plays a major role on your lifestyle, apart from age and duration of the policy. You need to narrow down your search on the sum assured and choose a right policy that would be beneficial to your family once you are gone. Seek professional help from insurance advisors of Coverfox.com to solve your dilemma. In short, your investment should beat inflation.

Complementary

Remember that your pension plans should always compliment your current retirement savings. You should focus on risk/return investments in case you invested too much in conservative instruments.

Flexibility

It is advisable to invest at an early age in pension plans. Your capacity to pay higher premiums can grow only as your income grows. There are certain pension plans that allow increasing the premiums gradually. So, go for it!

Eligibility Criteria for Pension Plans

The eligibility criteria for availing a pension plan will differ from one provider to another. Some of the factors that are taken into consideration while determining whether or not an individual can avail a pension plan are as follows:

Entry age - For availing a pension plan, one must ensure that he or she fits in the minimum and maximum age bracket, which is fixed by the pension plan provider. This criterion will differ from one company to another. Prior to sending in an application for a pension plan, users are advised to go through the minimum and maximum entry ages listed in the brochure of the plan.

Purchase price - This is the amount one will need to put in to avail an immediate annuity plan. Similar to entry age, the minimum purchase price and maximum purchase price will differ among pension plan providers. Many pension plans don’t generally have an upper limit on the purchase price.
Annuity payout - The annuity payout modes offered by most companies are monthly, quarterly, half yearly and yearly. There is generally a minimum amount associated with each annuity payout frequency.

Pension Plans riders

Nowadays, most of the Pension plans come with an additional/add-on riders that enhance your pension plans. Some of the most common riders available are as follows:

Waiver of premium
Critical Illness rider
Accidental death and dismemberment rider
Term rider

Documents Required to Buy a Pension Plan in India

Here’s the list of all documents that is required to buy pension plan in India:

Document for Age proof	Document for Identity proof	Document for Address proof	Document for Income Proof
Birth Certificate	Driving License	Electricity Bill	Salary slip
School or High School mark sheet	Passport	Telephone Bill	Bank Statement slip
Driving License	Voter ID	Ration Card	IT return file
Passport	PAN Card	Driving License	-
Voter ID	Aadhar Card	Passport	-
-	-	Aadhar Card	-

Submit Proposal Form – Must submit duly filled proposal form to apply for a pension plan.

Medical Reports – Some life insurance companies may ask for a medical check-up before accepting your proposal for a pension plan. Medical reports are required to be submitted.

Best Pension Plans in India 2018-19

Pension Plan Name	Entry Age	Premium/Purchase Price	Annuity/Benefit Payout	Annuity Payout Mode
SBI Life – Annuity Plus	Minimum: 0 year - product conversion; 40 years - all other cases, 55 years - QROPS cases Maximum: 80 years	Minimum: Such that the minimum annuity instalment can be paid Maximum: No limit	Minimum: Monthly: Rs. 1000 Quarterly: Rs. 3000 Half-yearly: Rs. 6,000, Yearly: Rs. 12,000 Maximum: No limit	Monthly, Quarterly, Half-yearly or Yearly
ICICI Pru Immediate Annuity	Minimum (Individual standalone): 30 Years last birthday; 55 Years last birthday if the policy is purchased as QROPS via transfer of UK tax relieved assets.	-	Minimum annuity per annum is Rs. 12,000 (Rs. 1,000 per month. Maximum: No limit	Monthly, Quarterly, Half-yearly or Yearly
HDFC Life New Immediate Annuity Plan	Minimum: 20 years Maximum: 85 years	Band 1 - Less than Rs. 250,000 Band 2 - Rs. 250,000 to Rs. 499,999 Band 3 - Rs. 500,000 to Rs. 999,999 Band 4 - Rs. 1,000,000 to Rs. 4,999,999 Band 5 - Rs. 5,000,000 and above	Minimum: Monthly: Rs. 1000 Quarterly: Rs. 3000 Half-yearly: Rs. 5,000, Yearly: Rs. 10,000 Maximum: No limit	Monthly, Quarterly, Half-yearly or Yearly
Reliance Immediate Annuity Plan	Minimum: 20 years Maximum: 80 years	Minimum: Rs. 1,00,000	Minimum instalment: Rs. 1,000	Monthly, Quarterly, Half-yearly or Yearly
ABSLI Immediate Annuity Plan	Minimum: 30 years Maximum: 90 years	Minimum Regular Income of Rs 1,000, Rs 3,000, Rs 6,000 or Rs 12,000 for monthly, quarterly, semi-annual and annual mode of annuity payment	-	Monthly, Quarterly, Half-yearly or Yearly
HDFC Life Click 2 Retire Plan	Minimum: 18 years Maximum: 65 years	Minimum: Annual - Rs. 24000 Half Yearly - Rs. 12000 Quarterly - Rs. 6000 Monthly - Rs. 2000 Single Pay - Rs. 50,000 Maximum: No limit	Maturity (Vesting) Benefit shall be the higher of the following: Fund Value or Assured Vesting Benefit In the event of the policyholder’s demise, the nominee will receive the higher of: Fund Value 105% of the premium(s) paid.	-
LIC New Jeevan Nidhi Plan	Minimum: 20 years Maximum: 60 years under single premium, 58 years under regular premium	-	Minimum Basic Sum Assured: Rs. 1,00,000 under Regular Premium policies Rs.1,50,000 under Single Premium policies Maximum Basic Sum Assured: No Limit	-
Max Life Guaranteed Lifetime Income Plan	Minimum: 50 years Maximum: 80 years	Minimum: Minimum Single Premium is subject to a Minimum Annuity payout being at least Rs. 1,000 per month. Maximum: No limit	Modal factors applicable for Modes other than annual mode are mentioned below: Monthly: 0.08 Quarterly: 0.24 Semi Annually: 0.49	Monthly, Quarterly, Half-yearly or Yearly
Bajaj Allianz Retire Rich Pension Plan	Minimum: 30 years Maximum: 73 years	Minimum Regular Premium: For PPT less than 7 years: Rs. 50,000 - per yearly instalment Rs. 37,500 - per half-yearly instalment Rs. 25,000 - per quarterly instalment Rs. 9,500 - per monthly instalment For information on PPT 7 to 10 years and PPT 11 years and above, please visit the company website	Guaranteed Vesting Benefit of 101% of the total premiums paid. At the end of policy term (or vesting date) vesting benefit will be higher of GVB or the fund value. Guaranteed Death Benefit 105% of the total premiums paid	-
Reliance - Smart Pension Plan	Minimum: 18 years Maximum: 65 years	Minimum Regular Pay: For PPT 15 to 19 years Rs. 18,000 - half yearly mode Rs. 9,000 - quarterly mode Rs. 3,000 - monthly mode For PPT 20 years & above Rs. 10,000 - half yearly mode Rs. 5,000 - quarterly mode Rs. 2,000 - monthly mode For information on limited pay and single pay, please visit the company’s website	Death Benefit: On the life assured’s demise, the higher of the total of balances in the unit account as on the date of intimation of death or 105% of the total premiums paid till the date of intimation of death shall be paid to the nominee. Survival/Maturity Benefit: The higher of the total of balances in the unit account as on the vesting date or 101% of the total premiums paid up to the vesting date will be paid to the policyholder	-

SBI Life – Annuity Plus

SBI Life- Annuity Plus offers a comprehensive range of annuity with single payout option. Here, you are assured of a regular annuity/pension for rest of your life. This plan offers the following:

Flexibility- In terms of offering comprehensive range of annuity options
Security- In terms of steady retirement income
Reliability- In terms of offering fixed annuity/pension throughout your life

Apart from that, it also offers you a single life annuity, lifetime income with balance capital refund, lifetime income with annual increase of 3-5%, lifetime income for 5, 10, 15 or 20 years.

ICICI Pru Immediate Annuity

With ICICI Pru Immediate Annuity Plan, you can choose to make one-time payment and choose from the 5 annuity payout option. Here, you get 4 mode of payouts monthly, quarterly, half-yearly or yearly. The payout option in this plan are as follows:

Joint life, last survivor with purchase price return.
Annuity for life.
Guaranteed annuity for 5, 10 or 15 years
Joint life, last survivor without purchase price return.
Annuity for life with return of purchase price.

HDFC Life New Immediate Annuity Plan

HDFC Life New Immediate Annuity Plan is a non-linked traditional annuity plan that is designed to offer you various annuity options and provide an opportunity to live your life on your terms even after retirement. You can get the following benefits out of this plan:

Choose the frequency of annuity
Get guaranteed income for as long and you and your spouse lives
Tax benefits can be availed and they are subject to the tax laws in India
Choose from the wide variety of annuity options.

Reliance Immediate Annuity Plan

This plan was designed to offer the policyholder a plan for retirement that can help him build corpus post retirement, so that they can live their life happily to the fullest. You receive the following benefits from this plan:

You can leave funds for your dependents (parents, spouse, children)
You can get tax benefits
You get regular income for your entire lifetime.

BSLI Immediate Annuity Plan

Birla Sun Life Insurance Annuity Plan is also a traditional non-participating single premium plan which provides regular income after retirement. It offers you with the following benefit:

You get tax benefit under section 80CCC of the Income Tax Act, 1961.
You have the flexibility to choose the frequency of pay-out
You get regular income at the time of retirement.

HDFC Life Click 2 Retire Plan

HDFC Life Click 2 Retire is an online unit linked pension plan designed for your retirement plan. The plan comes with the following benefits:

Regular income during your retired life
You get the advantage of benefiting from upside in the market
You do not have to incur premium allocation charge, policy administration charges and mortality charge

LIC New Jeevan Nidhi Plan

LIC of India's New Jeevan Nidhi Plan is a traditional with profits pension plan, offering a combination of protection and saving features. The plan comes with the following benefits:

You can choose optional accidental death and disability benefit rider.
You can get bonuses from the 6th year onwards.
In the event of death in the first five policy years, basic sum assured along with accrued guaranteed addition will be paid out.
In case of death after the first five policy years, basic sum assured, accrued guaranteed addition, simple reversionary and final additional bonus (if any), will be paid out.

Max Life Guaranteed Lifetime Income Plan

Max Life Guaranteed Lifetime Income Plan is an annuity plan, which converts your life-long savings into a regular income source. The plan comes with the following benefits:

Guaranteed income for as long as you live.
You can extend the lifelong income benefit to your spouse under the joint life annuity.
In the event of your demise, the nominee shall get the policy's purchase price.

Bajaj Allianz Retire Rich Pension Plan

Bajaj Allianz Retire Rich is a unit linked pension plan that comes with guaranteed vesting and death benefits. The plan comes with the following features:

Flexibility to pay top-up premium.
Premiums paid are eligible for tax deductions under section 80C of the Income Tax Act, 1961. Death benefits, maturity benefits and surrender value are eligible for tax benefits under Section 10(10D) of the Income Tax Act.
Flexible premium payment term.

Reliance - Smart Pension Plan

Reliance Smart Pension Plan is a participating unit-linked pension plan that helps save systematically and build a corpus for your retirement years. The plan comes with the following features:

Guaranteed loyalty additions of up to 9% of the single/annualized premium at the end of every third policy year, beginning from the end of 6th policy year.
Flexibility of premium payment - regular, limited or single payment mode.
Option to choose from a host of riders.

FAQs on Pension Plans in India

What should I keep in mind before buying a retirement/pension plan?

First, decide your retirement age and the amount you wish to save. Second, compare various pension plans in terms of vesting age, annuity, surrender charges, premiums, participating or non-participating, maturity benefit and death benefit. Third, seek financial advice from experts.

Which pension plan should I opt- Traditional or ULIP pension plan?

If you are planning way ahead than your retirement, say more than 10 years, it is advisable to opt for a ULIP based pension plan. As the premiums are invested in equity markets and has a good return on investment. However, you should keep in mind the charges levied under a plan. For which, you can compare pension plans.

What if I surrender my pension plan before maturity?

If you surrender pension plan before maturity, you may receive surrender value. However, these surrender value received is taxable as per the tax slab. Moreover, you may have to pay taxes that were exempted for all premiums paid until the exit. Kindly consult your tax advisor for more details on the same.

Is it possible to make early withdrawal from my pension plan?

Yes, it is possible to make early withdrawal from your pension plan. But there are some government regulations and restrictions which are applicable on an early withdrawal.

What are the tax benefits accompanying Pension plans in India?

As a policyholder, you are entitled to tax benefits under section 80CCC of the Income Tax Act which allows you to pay towards your Pension Plan. However, it is only allowed to deduction up to a maximum amount of Rs. 10,000 on your taxable income.

Is it possible to apply for pension plan online?

Yes, pension plans can be applied online. Nowadays, there are various websites which allow you to view pension plan and choose a plan of your choice.

What do you mean by annuity in a pension plan?

The term in annuity in pension plan is used for systematic payouts which you receive after retirement from your pension plan. Also, pension plans allow annuity payouts on a monthly, quarterly, half-yearly or yearly basis.

Can I make payments for pension plans online?

Yes, premium payment for pension plan can be done online. Most of the insurers have a secure payment system where you can make online payments safely without having to visit any branch.

What are the features of pension plans?

The features of pension plans are as under:

Guaranteed Pension/Income - You are bound to get a guaranteed income after your retirement, based on how you invest.
Tax Efficiency - Tax benefits can be claimed under Section 80CCC for contribution to pension funds.
Liquidity - Some companies allow withdrawals to be made during the accumulation stage.
Accumulation Duration - During this period, the investor makes payments on a regular basis or in one go. The purpose of wealth accumulation is to build a huge corpus.

What is participating and non-participating pension plan?

A participating policy enables you to share the profits of the company. These profits will be shared with you in the form of bonuses. In the case of non-participating policies, the profits are not shared, which means no bonuses get paid.

What is Public Provident Fund?

Public Provident Fund (PPF) scheme is a popular savings-cum-tax-saving instrument backed by Government of India. Investing in a PPF scheme enables you to build a retirement corpus, while saving on taxes. There is a minimum tenure of 15 years, which can be extended indefinitely in blocks of 5 years.

What is Employees' Provident Fund or Employees’ Pension Scheme?

Employees’ Provident Fund is a retirement benefit scheme that is available to all salaried employees. It acts as a savings platform, helping employees save some portion of their salary each month that can be used should the employee be rendered unable to work, or at the time of retirement.

What is PM Pension Scheme?

The Pradhan Mantri Atal Pension Yojana or PM pension scheme is a government-backed pension scheme introduced to bring the unorganized sector in India under the ambit of pension scheme. This scheme can be availed by individuals within the age group of 18 to 40 years.

What Is National Pension Scheme and its benefits?

Launched in January 2004, National Pension Scheme is a government-sponsored pension scheme, designed to allow systematic savings during the subscriber's working life. NPS provides retirement income with reasonable market-based returns.

The following are the benefits of investing in National Pension Scheme:

Tax deduction of up to 10% of Salary (Basic + DA) under Section 80CCD(1), within the overall limit of Rs. 1.5 lakhs under Section 80CCE.
An additional deduction of Rs. 50,000 can be claimed under section 80CCD (1B)
NPS account can be accessed online

What are the advantages of pension plans?

A pension plan is a long-term investment, where you put in small amounts on a regular basis and build a sizeable retirement corpus to take care of your financial future. The earlier you start investing, the more you’ll save, considering the power of compounding. Adding to the list of benefits, is its flexibility. Pension plans can be chosen as per your financial risk appetite. You have the option of choosing to invest in schemes, ranging from aggressive to balanced to conservative.

Can I buy a pension plan?

Most insurance companies in India offer Pension Plans to individuals within the age group of 35 years and 75 years. However, the age group may vary between insurance companies.

Can we withdraw NPS amount?

The entire contribution towards your National Pension Scheme corpus cannot be withdrawn before you are 60 years of age or retirement age. A pre-mature exit is allowed only till a maximum of 20% of your entire corpus, provided you fulfil the following criteria:

You will be eligible for partial withdrawal only on certain emergencies like higher education or marriage of children, specific illnesses and as loan for purchase or construction of a residential house.
You should be an NPS accountholder for at least 10 years.
You cannot withdraw from the corpus more than 3 times during the entire tenure.
You cannot withdraw within 5 years of the previous withdrawal, unless you need to withdraw for treatment of specific illnesses.

How can I open an NPS account?

Follow the below steps to open an NPS account:

Login to the NPS official website or visit any Point of Presence – Service Providers (POP-SP) branch for the Permanent Retirement Account Number (PRAN) application form.
Fill up the form with the required details accurately and submit the same at any Point of Presence - Service Provider (POP-SP), as per your convenience.
Next, submit a contribution slip with at least Rs. 500 for registration.
In addition, also submit the NCIS slip, mentioning the amount contributed towards your PRAN account.

How can I open Atal Pension Yojana account?

You can open an Atal Pension Yojana account by following these simple steps:

Get in touch with your bank where you want to open your account.
Once you get the Atal Pension Yojana Form, fill it up accurately correctly.
Make sure you maintain the required amount in the bank account that you have registered for the Atal Pension Yojana account, so that the auto-debit process is not unsuccessful.

How do pension plans work?

Here’s how pension plans in India work:

Guaranteed Maturity Benefit: The Maturity Benefit that a policyholder is eligible comprises of either the fund value or 101% of the total premium paid, whichever is higher.
Guaranteed Death Benefit: If the policy is not in discontinued status, it carries a guaranteed death benefit which is Death Benefit, which is the amount that the nominee is eligible for on the unexpected death of the policyholder during the pension plan tenure, is 105% of the total premium paid till then. It also includes the benefits of top ups that the policyholder may have opted for. For a pension plan that has been discontinued, the Death Benefit comprises of the funds that have accumulated against the pension plan in the Policy Discontinued fund.

In the case of the unforeseen death of the pension plan accountholder, the nominee can choose from these three options - withdraw 1/3rd of the maturity amount, or utilize the entire benefit amount to purchase an annuity plan, or opt for a combination of both.

Discontinuation or Surrender Benefit: Now, the accumulated benefits against pension plans cannot be revoked on the discontinuation of premium payment for three years or more, unlike earlier. If a policyholder discontinues or surrenders his/her pension plan within first 5 years, the fund value on the day of surrender will be shifted to Policy Discontinuation Plan, minus the deduction of applicable charges.

How do you invest in a retirement plan?

An effective retirement plan is one that should fulfil the following parameters:

Corpus should be sufficient
The more additional investment benefits, the better
Investment rate should be more than the inflation rate
Include liquidity benefit
Flexible enough to adjust to changes in investment objectives
Effective risk management

How does retirement plan work?

A retirement plan or pension plan, offered by an organisation, enables its employees to contribute a certain percentage of their income towards a pension plan every month. The employer also contributes the same amount towards the pension scheme account of its employees. The pension payment of employees is decided by the length of his/her working years and annual income till retirement.

Is a pension plan an insurance contract?

Yes, a pension plans offered by an insurance company is an insurance contract.

Is a pension plan guaranteed?

No, not all pension plans offer guaranteed benefits.

Is annuity from Jeevan Akshay taxable?

Yes, annuity earned from LIC’s Jeevan Akshay is taxed according to your income tax slab.

Is Atal Pension Yojana (APY) tax exempted?

No, annuity returns from Atal Pension Yojana (APY) is taxed as per your income tax slab.

Is LIC Jeevan Akshay a good policy?

Yes, LIC Jeevan Akshay is one of the best pension plans from LIC.

Is pension stopped in India?

No. Pension services are running in India.

Is there any pension plan in LIC?

LIC offers 3 different pension plans:

LIC New Jeevan Nidhi
LIC Jeevan Akshay VI
LIC Jeevan Shanti

What is a pension plan?

A pension plan, also known as retirement plan, acts as a reliable and stable source of income post retirement. It is a financial plan that enables individuals to save during their work years so that they can reap its benefits for sustaining their usual standard of living after they retire. Organizations that offer pension plans to their employees deduct a certain part from their income towards their individual pension fund. The accumulated amount is given to employees post retirement.

What is a retirement insurance contract?

A pension plan offered by a Life Insurance company is a retirement insurance contract.

What is a retirement policy?

A retirement plan, also known as a pension plan, acts as a reliable and stable source of income after one has retired. It is a financial plan that allows individuals to save during their work years and reap its benefits for sustaining their usual standard of living after they retire.

What is HDFC Life pension guaranteed plan?

The following are the salient features and benefits of HDFC Life pension guaranteed plan:

A variety of annuity options designed to meet different financial objectives post retirement
Flexibility to choose between single or joint life plan
Flexibility to increase annuity pay outs through the Top Up option
Offers a choice between immediate and deferred annuity
Flexibility annuity payments - monthly, quarterly, half-yearly or yearly, as per the policyholder’s preference
Includes Return of Purchase Price in case of the unforeseen death of the policyholder
Immediate annuities can be purchased from policyholders by banks and financial institutions as per the reverse mortgage schemes

What is interest rate arbitrage?

The interest rate applicable on your pension plan will be fixed at the time of its enrolment, irrespective of its rise or fall during the subsequent years of your policy term. The interest rate is determined by your insurer and the prevailing market rates. This can affect you and your insurer in two ways. If the interest rate arbitrage increases, your insurer will continue to offer you returns as per the same interest rate on the date of enrolment of your pension plan. That means a loss for you and profit for insurer. In case the interest rate arbitrage falls, the rate that will be offered to you will remain constant, hence, resulting in a profit for you and loss for your insurer.

What is LIC Pension Plus plan?

The salient features and benefits of LIC Pension Plus plan are:

Entry age varies from 18 years to 75 years
Vesting age varies between 40 years and 85 years
Deferment term is 10 years
Does not offer sum assured
Regular premium starts from a minimum of Rs. 15,000 p.a. (except ECS mode) to a maximum of Rs. 1 lakh
Single premium varies from a minimum of Rs. 30,000, with no upper limit applicable
Includes flexible premium payment, payable monthly, quarterly, half-yearly and yearly
Offers Guaranteed Maturity Proceeds, guarantee of interest rate on Discontinued Policy Fund

What is NPS of Government of India?

The National Pension Scheme (NPS) is a pension plan that acts as a stable source of monthly income after retirement. Employers deduct a small amount from the monthly salaries of their employees and contribute the same towards their individual NPS accounts. The amount accumulated throughout the tenure is paid in instalments to the employee after retirement. For Central and State Government employees, the applicable deduction from their monthly income is 10%. An equal contribution is made from the government as well.

What is vesting age in pension plans?

Vesting age refers to the age at which policyholders start enjoying the returns of their insurance-cum-pension plan.

Where should I invest after retirement?

The following are some effective options that you can consider after retirement:

Senior Citizens' Saving Scheme (SCSS)
Bank Fixed Deposits (FDs)
Post Office Monthly Income Scheme (POMIS) Account
Mutual Funds (MFs)
Immediate annuities
Tax-free bonds

Which is the best LIC pension plan?

Jeevan Akshay is often considered to be the best pension plan from LIC.

Which is the best pension plan in India in the year 2019?

LIC’s Jeevan Akshay is usually rated as the best pension plan from LIC.

Which is the best pension plan?

The best pension plan in India is believed to be LIC Jeevan Akshay.

Which pension scheme is best in India?

LIC Jeevan Akshay 6 Plan
LIC Jeevan Nidhi Plan
SBI Life Saral Pension plan
HDFC Life - Assured Pension Plan
HDFC Life - Click2Retire
ICICI Prudential Easy Retirement
Birla Sun Life Empower Pension
Reliance - Smart Pension
Bajaj Allianz - Pension Guarantee
Max Life Guaranteed Lifetime Income Plan
Bajaj Allianz - Pension Guarantee

Which retirement plan is usually considered to be the best?

The best retirement plan in India is believed to be LIC Jeevan Akshay.

Who is eligible for NPS?

Any individual, irrespective of whether he/she is an Indian citizen or a Non-Resident Indian, is eligible for opening an NPS account on meeting these criteria:

Should be between 18 years and 60 years on the date of submission of the application form
Should comply with the Know Your Customer (KYC) norms as mentioned in the Subscriber Registration Form (CS-S1 and CS-S2)

Why is it necessary to have a pension plan?

A pension plan enables individuals to financially plan for their post retirement years while they are gainfully employed. That way, they can make the best of its benefits for sustaining their usual lifestyle after their retirement.

What is Participating and Non-Participating Pension Plan?

A Participating Pension Plan, also known as with-profit policy, offers policyholders a share in the profits of their insurer in the form of dividends or bonuses. These dividends and bonuses are payable annually. However, these are not guaranteed as it is determined by the performance of the insurance company in that financial year. In comparison, the profits made by the insurance company is not shared with the policyholders in the case of Non-participating Pension Plans, also called without-profit or non-par policy. Since there are no dividends or bonuses involved, the premiums are also comparatively less.

What is PM Pension Scheme?

Prime Minister Pension Scheme, also known as Atal Pension Yojana, is a government-backed pension scheme that is particularly tailor-made for senior citizens. It offers financial security and guarantees maximum returns.

What is New Pension Scheme and its benefits?

New Pension Scheme (NPS) under the National Pension Scheme (NPS) enables individuals to invest in equity and debt market, according to their preference. Further, it also offers them the benefit of withdrawing 60% of the amount at the time of retirement and the remaining 40% can be used to buy annuity.