Benefits of a Pension Plan for an Amazing Retirement Life

Retirement and Pension Plan Benefits

Years back, India's pension planning options were restricted to long-term government tools such as Public Provident Fund (PPF) or Fixed Deposit (FD) bank account. However, people have started investing in diverse options & experiencing a healthier and longer life- financially- due to the introduction of various new investment plans and the changing approach of contemporary buyers towards retirement planning and pension funds.

A rise in average lifespan necessitates thoughtful retirement planning. Unfortunately, the majority of us believe that retirement planning is solely about money. However, having adequate money for your retirement days is more about systematically managing your finances.

It would be best to have a strategy in place for how you intend to spend your retirement years. That is the first stage in the retirement planning process. Some of the most compelling reasons to plan for retirement include the fact that you cannot work indefinitely, that it may assist you in the case of an emergency, and that you will have the opportunity to establish a savings corpus to improve your wealth growth.

Retirement and Pension Plan Benefits

Retirement planning demands a combination of financial and life planning. Your personal planning determines your retirement life. On the other hand, financial planning aids in budgeting income and spending to support your own goal. Let us look at some of the benefits of investing in Retirement and Pension Plans:

Flexible-Premium Payment Terms

You have the option of choosing the premium payment term with retirement and pension planning. You can choose your premium payment term based on your financial objectives.

Guaranteed Investing Benefit

With retirement plans, there are options wherein you will receive a fixed or online insurance to assist you in your retirement planning. Not only that, but you may be able to provide money to your spouse in the event of your unexpected demise.

Death Benefit

Pension plans also include a death benefit to ensure your family's financial security while you are away. In the event of your unfortunate demise, your beneficiary will receive the sum assured or death benefit.

Retirement Plan Customization

You can customise your retirement plans with additional riders (at additional costs) to provide extra protection for you and your family.

Tax Advantages

Section 80C of the Income Tax Act of 1961 allows for a tax deduction for retirement and pension plans. To purchase a new policy or payments made toward the renewal of an existing policy offering a pension or periodic annuity, you can claim a tax deduction of up to Rs.1.5 lakh per annum. Some money is paid out at the end of a tax-free pension planning, while the remainder is used to buy annuities. Annuity income is added to your taxable income and taxed according to your tax bracket.

Types of Retirement Plans

There are three types of retirement plans :

The kind of investment

Investment Policies : Regular premiums are paid into this plan, invested in equity and debt instruments. Depending on your financial risk level, you can choose from a variety of fund options. However, the returns are subject to market risks.

Savings Plans : Savings plans are those that don't invest in the stock market. Instead, you pay regular premiums and receive payouts regularly after the policy period. And you'll also receive bonuses if you've earned any (in case of participating plans).

Time when the payout begins

Immediate :You can pay a one-time premium and receive an immediate annuity that lasts for the duration chosen by you.

At a fixed time in the future : You can select to start receiving payouts at a specific period in the future, such as your retirement.

Plans for Annuity

Single Life with No Premium Return : You will be paid for the rest of your life.


Return of premium for a single life :You will be paid income for the rest of your life, and your nominee will be paid the amount invested as an annuity upon your death.


Joint Life with No Premium Return :You and your spouse will continue to get income for the rest of your lives.


Joint Life with Premium Return :You and your spouse will continue to receive payments until one of you is absent. Following the demise of the second life, the nominee will receive the sum invested in an annuity.


Given that your financial investments would be your only source of income after retirement, therefore, establishing these two pillars is critical. Your retirement and pension planning will come into play at this point. It's high time to consider wise planning to ensure a steady flow in your retirement.


*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
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