Checklist for Choosing the Best Pension Plan

by Vinaya HS on September 8, 2017

in Finance

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At some or the other point in life, you may wonder if you will be able to meet your financial obligations once you retire. Without a source of regular income post your retirement, it may become difficult to have a financially secure future. In order to avoid such a situation, you should invest in a life insurance retirement scheme and live your golden years with ease.

Pension plans help in building a corpus for your retirement. By investing regularly in your early years, you may enjoy the benefit of periodic income once you retire. Besides, you may also avail of tax benefits on the invested amount. With such advantages, you may opt for a retirement scheme and live a tension-free life post your retirement.

With numerous plan options available in the market, choosing the right one may turn out to be an overwhelming experience. You may refer to the checklist mentioned below in order to choose the best plan based on your needs.

1. Types of retirement schemes

One of the most popular types of retirement plans in India is provident funds. There are certain government plans as well, such as Senior Citizen Savings Scheme (SCSS), Monthly Income Scheme (MIS), and Public Provident Funds (PPF), among others. You may also consider other plan options, such as immediate annuity, annuity certain, immediate annuity, pension plans with or without life cover, and guaranteed period annuity plans, among others.

2. Tax benefits

Section 80CCC of the Income Tax Act details out the tax deductions on annuity plans. According to this section, tax deductions are allowed up to a maximum of INR 1 lakh on annual premiums paid towards an existing policy or while purchasing a new policy. In order to reap tax benefits, you may choose a plan option that is eligible for such deductions.

3. Early access

The goal of pension schemes is to have money available once you retire. However, it is impossible to rule out the chances of any untoward incident along the way. This may entail a premature withdrawal to cover costs towards an unfortunate event. For this purpose, you may select a plan that offers early withdrawal, so that you have the necessary amount when you need it the most.

4. Features and benefits

Different schemes have varied features and advantages. Some plans provide annuity as early as 40 years, while some have a vesting age of 79. Some retirement schemes give a share of the insurer’s profits to policyholders, while some do not.

It is therefore imperative to conduct extensive research and compare the features of various plans. You may also consider the benefits of the best pension plans and make a choice based on your needs.

Investing in a retirement scheme helps in obtaining a regular stream of cash flow to meet your financial needs post your retirement. It ensures an independent and financially secure life in your golden years

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