You may perceive the old age as a period of life when you are not likely to get any benefits or perks. However, from financial aspects, you can get monetary benefits when your need arises. Pension plans are a type of financial solution that provides people in a golden age with the advantages of investment and insurance.
Retirement plans for elderly people need the employer and employee to make a certain amount of contribution to funds. The funds are generally not used when the employee is serving its employment; hence, they are kept aside for providing employee benefit in a later phase, while retiring.
Why Do You Need Pension Plans?
If you are in the 20s and stepped into the world of responsibilities, understanding financial investments and making a diversified portfolio become difficult. Moreover, you think yourself that pension plans are the critical thing to worry about right now because you have started your career now. However, if you start thinking of pension plans and how they work at the earliest stage, your life is sorted during the old age.
- SecurityUnlike the Western countries, India does not have a social security system run where the government runs funds services to support aged people financially. The health risks are always high when you cross the age mark of 60 years and as you will be unemployed by then, taking care of yourself can become crucial. Pension plans can increase your life expectancy by giving you the financial solution when you might be in need of undergoing medical treatment.
- Regular IncomePension plans with good returns make sure that you have a normal flow of income after retiring. The utilization of the plan can help you maintain the previous relaxed lifestyle that you had once. Furthermore, the additional bonuses can minimise woes form your life.
Types of Pension Plans
Every living person has unique demands and needs which call for different pension plans that can offer help to every person on a large scale. As it is already known that contributed to the retirement investment plan should initiate when you get your first salary. It is mandatory to have a Provident Fund or PPF Account according to the regulations of Central Government of India.
However, you must know that the pension plans benefits differ from plan to plan to assure you to have a proper post-retirement life.
If you did not start to invest in the pension plans at the earliest stage, you do not need to worry because the immediate annuity is ideal for the late risers. By paying a lump sum amount of money, the period of your annuity initiates. Even at the event of your sudden demise, the chosen nominee is offered the sum assured.
- The payout frequency ranges on annually, quarterly, semi-annually and monthly basis.
- Needless to say, this mind of the plan is perfect for those who want to maintain regular income flow even after retirement within the few days of investment.
- The con of the plan is that the insured is unable to cancel or withdraw investment amount or annuity.
For making a proper retirement corpus when your employment period is over, a deferred annuity can be helpful on a large scale. Recognised to be one of the popular pension plans with tax benefits, you may pay the premium amount in a lump sum or choose to pay it over the course of time. In the end, you get the annuities on a regular basis for the rest of your life.
Traditional retirement plan
The pension plans review indicates the fact that the investment is done for government securities which act as a debt instrument. Additionally, the risk factors are lower with this mind of financial product making the plan a secure option for all.
Unit-Linked Pension Plans
If you are looking for the pension plans which have a higher amount of return than that of the transition pension plan, unit-linked plans can cater to your needs. Choosing to allocate investment in various equities, and debt, you can start the plan at an early stage.
Pension Plan with Tax Benefit
Now amidst the pension plans taxable, tax benefits can be a relief to every aged person in India. Regulated by the legal framework of Section 80CCC, the Income Tax authority makes sure that every Indian citizen invests in pension plans with monthly returns. When you are withdrawing the amount, you can make withdrawal ⅓ of the entire pension fun when there is no need of paying tax.
In case, if you ever face any kind of pension plans problems, you can always take help of the financial advisors. The agents can advise you choose the ideal pension plans that offer guaranteed sum assured to the nominee after the death of the insured. Moreover, you can understand the terms and condition well so that you get the full benefits.