5 Things You Should Know About Pension Plans In India

6 min read

Some things in life can never be delayed, like getting old, for example. You know you will turn 60 someday and then the job that you are doing right now might not be a part of your regular schedule. Retirement is predictable, but the sudden diseases or mishaps happening in your life are unpredictable. Especially when these things happen after the age of 60, maintaining the expenses and the proper lifestyle becomes very difficult.

That is why financial experts suggest you invest in the best pension plan in India so that you have regular income coming in even though you are not working after your retirement. But for that, you have to plan today. So, don’t delay! Start researching and planning for your retirement by opting for the best pension plan in India so that your later days are not stressful. But before that, read about these important things about pension plans carefully.

1. Be aware of the accumulation period — An accumulation period is basically the time from when you start paying a premium for the pension till the time you would draw the amount. During this phase, your pension provider invests whatever premium you pay for your retirement in different avenues . Also, you get a few taxes deducted from your pension plan as per the government rule.

Should Know About Pension Plans In India

2. Pension plans don’t offer flexibility to change between them — Most important thing you should know about pension plans is that if you pick a policy for your retirement, you will have to stick to it for some decades. It is because the pension plans don’t offer you the flexibility to change to different options in between them. So, evaluates the different policies very carefully before you pick the best plan in India for yourself.

3. Unit linked pension plan is one of the best options to consider — The unit Linked Pension Plan is one of the most commonly pursued retirement policies nowadays. It is a great option to consider for your retirement plan if you want to grow your money and keep it secure as well. The biggest advantage of opting for a unit linked pension plan is that it offers you the option of investing your funds in the market as per your risk appetite. Obviously, there would be a specific retirement cover amount that you will receive when you retire and is kept secure with the insurance provider. Other than this, you can utilise the left amount either in the equity fund or the debit funds.

Know Pension Plans In India

4. Pension plans are not entirely tax-free — It is important to know that even if you opt for the best pension plan in India, it is not entirely tax-free. You would be given some kind of text deductions as you pay your monthly premiums. However, when you receive the cover amount at the time of maturity of your plan, you have to pay some tax during that time.

5. You’ll have to buy an annuity plan as well — When your pension plan reaches its maturity, the insurer allows you to only withdraw some amount from your plan. For the rest of it, you have to purchase an annuity plan for a monthly regular income, and this is taxable.


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