We all are earning to make better our present and future. Everyone is doing hard work and trying to earn as much as they can so that they can spend their old age smoothly. In a few countries, governments are taking care of the old age people but there are so many countries around the world where a person has to plan for the future. Pension Plan is one of them. Pension Plan is also called Retirement Plan. The objective of the Pension Plan is to have a normal salary after retirement so that life can run smoothly.
What is a Pension or Retirement Plan?
Pension or Retirement Plan is an insurance product that provides your financial security when you retire. In other words, the Pension Plan is a kind of investment plan where you can get returns in the long term to secure your financial future. By investing a certain amount regularly, you can get a certain amount after retirement. You can withdraw as a whole or in parts during your retirement years. You can also opt for monthly pension benefits. Public Provident Fund is one of the most popular retirement planning schemes in India.
Who can opt for Pension Plans?
Anyone can opt Pension plan according to their goal. The Government of India encourages people to invest some amount in a pension plan for your future. The amount which is invested in a pension plan is also tax exempted. Any plan you choose must be in sync with your investment goals (or retirement plans).
Why you should invest in retirement plans?
Today’s lifestyle is not as simple as it was earlier. It is an ultra-modern stressful lifestyle. We barely get time to plan for the future and give a conscious thought about retirement planning. So to ensure a worry-free, quality retired life, we must ensure to plan for retirement well in advance so that we can relieve ourselves from retirement woes. Financial experts often recommend people begin retirement planning from the day they start earning. Starting early gives them more time for their wealth to grow.
Features and Benefits of Pension Plans:
- You can choose pure debt, pure equity, or a mix of debt and equity options to get maximum exposure.
- You can get guaranteed pension/income after retiring (deferred plan) or immediately after investing (immediate plan), based on how you invest.
- In an emergency, you are allowed to withdrawal during the accumulation stage in some plans. No need to depend on a bank or someone else.
- You can avail tax exemption under the Income Tax Act, 1961. The NPS (National Pension Scheme) and Atal Pension Yojana (APY) are both subject to tax deductions as per Section 80CCD of the Income Tax Act, 1961.
- You can either choose to pay the premium in periodic intervals or at once as a lump sum investment. The wealth will simultaneously accumulate over time to build up a sizable corpus.
- You can avail the benefits of a life-insurance cover – certain pension plans offer a life cover as well in which a lump sum amount is paid to the family member/nominee at the death of the insured.
- You can beat the inflation if you start your pension plan in early age.
There are numerous options for the pension plan in India. You can choose any pension plan according to your financial requirements. Before choosing any pension plan, it is advisable to do some research and analysis and then decide. You will be benefited more if you start a pension plan at an early age. It is advisable to all opt pension plans because it is a tax-free investment that secures your future.