Retirement & Pension Plans

Retirement and pension plans are financial instruments that can shape your hard-earned income into savings for your post-retirement life. It comes in various forms to cater to a multitude of savings and investment goals, enabling a financially stable retired life.

Retirement is a time when you can finally unwind and realize your long-held ambitions. However, if you are financially unprepared, it can be a difficult time. As a result, it is in your best interest to consider a pension plan, also referred to as a retirement plan, and understand how important it is at a young age. You will have more time to start saving for your retirement if you do so.

A pension plan is a fund that you build throughout your life to ensure a permanent source of income after your retirement. It is an investment that grows through regular contributions. So, when you plan for your retirement at an early stage in life by purchasing the best pension plan in India, it helps secure a sizeable fund.

In general, there are different ways in which pension plan functions. For example, an individual's pension fund may be created by sharing the contributions between their employer and themselves. In this case, the employer is usually responsible for the larger percentage of it.

Additionally, an individual can create a pension fund by depositing a certain amount monthly. Then, upon retirement, the person is eligible to receive the payments as an annuity, depending on the pension information. For the same, it is critical to explore the best pension plan in India, to realise which one suits your need the best.

It is crucial to understand how the pension scheme in India works to the investment amount appropriately, and the same applies to retirement plans. This is because the chief function of a pension plan is to replace the income source; hence, it must be adequate to cater to future financial requirements.

Retirement is a time when you can finally unwind and realize your long-held ambitions. However, if you are financially unprepared, it can be a difficult time. As a result, it is in your best interest to consider a pension plan, also referred to as a retirement plans, and understand how important it is at a young age. You will have more time to start saving for your retirement if you do so.

In our ultra-stressful modern lifestyle, we barely get time to plan for the future and give a conscious thought about retirement plans.

However, we can pause a little, understand current and the possible future expenses based on our lifestyle and start investing in a life insurance retirement plan. In that case, we can relieve ourselves from retirement woes. What's important is to understand about the top retirement plans or best pension plan in India is that:

• It is a disciplined, affordable, and secure way for retirement planning.
• You can get protection for your family, along with your retirement savings.
• You can also choose to invest in market-linked pension plans or stick with a conventional pension plan

You should invest in retirement plans, which helps provide a guaranteed income after retirement to cater to your financial needs. Not only this, Retirement Plans & Pension Plans also provide a death benefit which is payable on the death of the policyholder.

With retirement plans, you get the flexibility to save while you are earning to build a large corpus of funds for retirement. You can start your retirement planning as soon as you start earning.

You can start by saving smaller amounts at regular intervals to meet unexpected expenses and provide financial security post-retirement. Thus, investing in the best pension plan in India is a safe and secured way to ensure financial security for your senior years.

The primary purpose of investing in a pension plan is to have a stable income even post- retirement and also have a fallback option in case your savings fall short during emergencies. But how do pension plans in India work? Let’s have a look:

Like all other investment & savings plans, you are required to pay a premium for a pension scheme in India. However, the premiums are accumulated in an asset or fund of your choice, which typically lasts for a pre-determined period. After the plan reaches its maturity stage, you will be eligible to receive the pension benefits, which can be further utilized in the following three ways:

• Withdraw the complete benefit/amount in one go
• Purchase an annuity plan.
• Partially withdraw the pension benefits and use the remaining sum to invest in an annuity plan.

However, today, policyholders also have the option of surrendering/discontinuing a pension plan, but a cancellation fee/charge might be deducted. Moreover, you can continue to earn interest on the pension plan if you surrender after 5 years. In comparison, you will need to buy an immediate or deferred annuity plan if you discontinue retirement plans in India before the completion of 5 years.

Annuity plans are one of the most common types of pension plans currently available in India. Below are some of the key features of an annuity plan that you should consider before making it part of your retirement savings plan:

The benefits offered by annuity plans in India are among the key reasons why these plans are a popular option among those seeking to secure their retirement. Some key annuity plan benefits that you should keep in mind include:

Qualifying Recognised Overseas Pension Scheme or QROPS for short are a unique category of pension plans offered by life insurance companies in India. The retirement plans allow Non-Resident Indians to transfer their UK-based pension contributions to India in a cost-effective manner. Currently Axis Max Life insurance offers NRIs the option to choose from the below 4 QROPS-compliant pension plans: 

With pension and retirement plans, you may get some of the benefits mentioned below:

1. Guaranteed Vesting Benefit

2. Death Benefit

3. Flexible Premium Payment Terms

4. Customize your Retirement Plan

5. Tax Benefits⁴

When it comes to pension plans in India, there are many options ranging from new-age retirement products such as whole life ULIP to Public Provident Funds (PPF). But the availability of so many pension plans can make it somewhat challenging to figure out the right fit for you.

Axis Max Life Insurance offers retirement plans that can help you turn your life savings into life-long income comfortably. These plans come with varied benefits and features to suit diverse financial profiles. Here’s a comparison of two retirement plans offered by Axis Max Life Insurance to give you a detailed perspective:

The process of deciding your income goals for life post retirement, as well as the actions and decisions required to meet those goals, is known as retirement planning. Identifying sources of revenue, estimating costs, putting in place a savings plan, and controlling assets and risk are all part of retirement planning.

Your retirement plans can begin at any time, but it is most effective if you incorporate them into your financial planning at an earlier life stage. That is the most effective way to ensure a comfortable, stable, and enjoyable retirement.

If you’re wondering how much you need to save for retirement, there is no right answer, as it differs from one person to another. Moreover, while a specific savings amount might be sufficient for you, it might come close to nothing for the next person. However, there are some aspects that you can evaluate to figure out how much you should save for your retirement years, which are:

• It goes without saying that the earlier you start saving, the better. Therefore, start by considering your age when you start saving. For instance, if you are 30 years old and investing around 20-30% of your monthly income, you will be able to save sufficient funds.
• Next, evaluate your monthly expenses, credit card bills, EMIs, and other daily expenditure so you can get by with your savings comfortably during retirement.
• When it comes to retirement planning and savings, it is also vital to consider all your long-term investments, as it will give you a clear idea of how much savings will be sufficient once you retire.
• Lastly, think about the lifestyle you wish to lead post-retirement. For instance, if you plan on travelling/exploring new countries after retirement, you might need a larger savings fund. However, if you wish to stay indoors and spend time with your loved ones, you can get by with less. Regardless, it is crucial to have sufficient financial backup for emergencies.

Retirement planning, like any other financial planning in life, must be done ahead of time. With the average working life of 30 to 35 years, the best retirement plans are often begun at a young age. This implies that retirement preparations and implementation take place at various stages of life. When done correctly, you will reap the benefits of investing in the best pension scheme in India that you started years ago.

Retirement planning is essential for everyone including salaried individuals. So, if you are one, here are a few steps you can follow:

There is a common misconception that self-employed people don’t need to plan for retirement or that it isn’t as important as it is for salaried individuals. However, retirement planning and investing in pension schemes & plans is crucial for everyone, regardless of their employment status.

So, here are some tips that self-employed individuals can consider for effective retirement planning:

It can be difficult to plan for retirement at any age. Even more so if you are already retired and do not have a regular income. However, there are some things you can do when you are in your 60s or older to help you secure your golden years financially:

Since ULIPs are invested in the equity market, they yield higher returns compared to other retirement, pension, and investment plans such as FDs, pension schemes, bonds, and endowment policies. In addition, investing in Unit Linked Insurance Plans (ULIPs) involves less risk, so you get the benefit of both security and excellent returns.

There is an age requirement to meet when buying pension plans in India, much like every other investment plan. A pension plan can be purchased for someone who has reached the age of 18. A maximum age limit for purchasing a Pension Plan also exists. Most insurance providers have set the maximum age limit at 65-75 years old.

Simply put, if you see financial security as a crucial part of your future, you should begin retirement planning and invest in a pension plan. Of course, since each person has a unique financial profile, the details of it may differ. However, anyone who meets the following points of reference should consider investing in the best pension schemes in India.

• You want to ensure that your partner has a financially stable life while you are away.
• You want to set up a fund to cover potential high healthcare expenses.
• You want to keep your current lifestyle after you retire.