Investment Plans 13810 views February 3, 2020

Which Pension Plan is Best in India

A pension plan is an investment option which helps in allocating your savings to accumulate a corpus over a certain period of time. Pension plan provides with a steady and guaranteed regular source of income after you have stopped working. It provides you with financial security so that you will not have to compromise on your living standards even after your retirement. There are two annuity plans which are Deferred Annuity Plan and Immediate Annuity Plan

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Deferred Annuity Plans

Deferred annuity plans are those people who want savings oriented plans. In deferred annuity plans, you can choose the duration of the plan and pay premiums over the chosen duration. The premiums paid by you accumulate into a corpus. In case of death of insured during the plan term, the death benefit would be paid. On the other hand, on vesting you can choose a pay-out option.
Hence, Deferred Annuity Plans are best for those who want to create a corpus for their retirement.

Immediate Annuity Plans

Under the Immediate Annuity Plans, the annuity payments start immediately after buying the policy. You pay a lump sum which is called purchase price to buy the plan and lifetime annuities are paid from such lump-sum premium paid by you. You can choose to receive the annuities in different modes available whichever suits your needs and requirements. Hence, Immediate Annuity plans are best for those who have a lump-sum amount in hand and want regular incomes from such lump-sum.

How to choose which pension plan is best in India?

In order to choose which pension plan is best in India, you should consider the following factors and choose one which best suits your needs.

1. Timing

If you want annuity payments to start immediately then immediate annuity plan is the right choice. However, if you want regular pension payments to start after your retirement then you should go for a deferred annuity plan. This choice also depends on the age at which you are buying the pension plan. If you have just started your career, the deferred plan is for you whereas if you have recently retired and have a lump-sum retirement benefit that is gratuity or provident fund then the immediate plan is for you.

2. Variability

If the annuity amount is fixed which is either guaranteed or not guaranteed then it is fixed annuity and if the annuity amount varies on the performance of the underlying investments then it’s a variable annuity. Hence a person who wants lower risk may choose fixed annuity where returns are low and people who have higher risk appetite variable annuities is for them which has higher returns.

3. Coverage

An annuity plan can cover can be a single individual or joint in which you can cover another person who would continue to receive regular annuity payments for a lifetime. In a joint-life annuity, the annuity is first paid to the life assured and after his/her death the spouse of the insured continues to receive the annuity payments. Hence if you want to cover your spouse as well you can opt for joint-life annuity so that they receive payment even after your death.

Best pension plans in India

1. LIC Jeevan Akshay 6 Plan

The LIC Jeevan Akshay 6 plan is an immediate annuity plan which you can buy by paying a purchase price or lump sum amount as a single premium. The pension payment starts immediately after buying the plan.

2. LIC Jeevan Nidhi Plan

The LIC Jeevan Nidhi Plan is a pension plan with profits. The accumulated amount of the plan is used to generate the pension for you based on your survival after the term of the policy.

3. SBI Life Saral Pension Plan

The SBI Life Saral Pension plan is an individual and participating plan. It offers you protection from fluctuations in the market and volatility. It is a non-linked and traditional pension plan.

4. HDFC Life – Click2Retire Plan

The HDFC Life – Click 2 Retire plan is a Unit Linked Plan which offers you market linked returns in return of minimal charges and helps in receiving after retirement requirements.

5. HDFC Life – Assured Pension Plan

The HDFC Life – Assured Pension Plan is a Unit Linked Pension Plan which offers you market linked returns with some loyalty additions to meet your retirement goals.

6. ICICI Pru – Easy Retirement Plan

ICICI Pru- Easy Retirement plan helps you to receive regular income after you stop working post your retirement through equity investment. ICICI Pru Easy Retirement helps to generate good long term returns as well as provides protection against market volatility.

Conclusion

There are many other optional features and advantages such as higher coverage, partial withdrawal, etc. Hence which pension plan is best in India depends on your need. The pension plan which best fit your requirements and purpose is the best pension plan in India for you. You must, therefore, access your requirement and consider relevant factors before buying a pension plan for your retirement.

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