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The purpose of a pension plan is to provide you with a permanent source of income after you retire. It is a type of investment that grows through regular contributions. A comprehensive pension plan in India helps to secure a sizable retirement fund when you plan for it early in life.
Generally, pension plans operate in different ways. In some cases for example an individual’s pension fund is made up of contributions made both by their employer and by themselves. A majority of the cost is usually borne by the employer in this situation.
In addition, individuals can create pension funds by depositing a certain amount each month. Depending on the person’s pension information, the payments will be received as an annuity after retirement. The best pension plan in India must be explored in order to determine which suits your needs best.
BENEFITS OF RETIREMENT PLAN:
With retirement plans, you not only get a fixed or guaranteed income but you might also get an option wherein your spouse or nominee whosoever made get the income upon the untimely death of the Insurance Holder. Another benefits of Retirement Plan is Flexibility in the premium payment terms, customization of the same and tax benefits.
TYPES OF RETIREMENT PLAN:
One of the main reasons for investing in a pension plan is to have a stable income post retirement and also graping the benefit of redeeming the amount in case of emergencies. When it comes to finding the best retirement plan for you, Digi Bima can help you find the most suitable type of Pension Plan for you. Different types of Pension Plans are –
- Deferred Annuity – The policyholder can create a corpus under the deferred annuity pension plan by making monthly or daily premium payments. As a result, they will accumulate a sizeable sum of money for a pension during the course of the scheme. Additionally, one can benefit from additional tax benefits through this type of pension plan.
- Immediate Annuity – It is an immediate payment version of an annuity. As soon as you make a lump sum deposit, you can begin receiving annuities as a pension. You can pick the type of annuity plan you desire and the investment amount.
- Annuity Certain – The policyholder would receive the annuity under this type of pension plan for a specific number of years, making it the greatest pension plan in India. They can choose the payment period that works best for them. The contributions are made to the pension plan’s nominee in the case of the insured’s demise.
- The National Pension Scheme – The National Pension Scheme is one of many pension plans the Indian government provides for retirees. Employees who participate in this pension plan can put money away on a monthly basis in a pension account that will be paid out when they retire.
- Life Annuity – As the name suggests, this kind of pension plan is in effect until the policyholder dies. In the event that the insured passes away, their spouse will be eligible for the pension payout if the policy provides a “with spouse” option.
- Life Insurance in Pension Plans – Such pension programmes combine both investments and life insurance. It guarantees that the policyholder’s family will receive a lump sum payment in the event of the policyholder’s passing. It’s crucial to keep in mind that this type of pension plan’s insurance payment amount can be lower than with a stand-alone insurance plan.
When your pension plan reaches maturity, you can begin taking advantage of its benefits. Once the pension benefits are available, they can be used in three different ways:
- Withdraw in one go
- Purchase an annuity plan.
- Partial withdrawal and rest invest again.
Nowadays, policyholders can also surrender/discontinue their pension plans, but may incur cancellation fees/charges. In addition, if you surrender your pension after five years, you will continue to earn interest. In contrast, if you stop your retirement plans before the 5-year mark in India, you’ll have to purchase an immediate or deferred annuity plan.