Retirement planning is a significant step for a working individual. During late adulthood, people don’t merely fall prey to old age but also financial struggles. To live the best retirement life of your dreams, it's advisable to look for the best possible pension plan available in the market.
Pension plans in India are investing strategies that reserve a portion of a person's income for use after retirement. Following a term of employment, life insurance firm and the government offer pension plans. Here are some of the most popular pension plans in India.
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1. Unit Linked Insurance Plans (ULIP):
In 1971, the Unit Trust of India (UTI) introduced the nation's first ULIP. Unit Linked Insurance Plans or ULIP are greatly preferred because of their transparency in investment.
It also provides dual benefits of insurance and investment to investors. Thus, providing the investors more advantages in a single pension plan. Here are the benefits of Unit Linked Insurance Plans:
Life Cover:
ULIP provides a death benefit, i.e., the sum that will be paid to the nominee if the policyholder passes away owing to given unfortunate circumstances during the policy term. In case the policyholder survives the policy term, they will receive the maturity value of the plan.
Tax Benefit:
Under Section 80C of the Income Tax Act, investments in unit-linked insurance plans are tax-deductible up to a total of Rs. 1.5 lacs.
The benefit under Section 80C will be limited to 10% of the Sum Assured if these criteria are not achieved, and the maturity funds will not be free of income tax. However, maturity funds are not subject to income tax.
2. National Pension Scheme (NPS):
The National Pension Scheme is among the best pension plans in India. The Pension Fund Regulatory and Development Authority of India monitors transparency in investment norms.
NPS provides a 9%-12% interest rate to the investor. It permits the investor to make emergency withdrawals, up to 25% of the total amount of savings made. The withdrawals can be made up to 3 times in five years.
3. Atal Pension Yojana (APY):
The Atal Pension Yojana is a pension plan in India ideal for workers belonging to the lower income class. APY aims to offer lower working-class citizens an opportunity to plan their life after retirement.
The subscriber needs to make monthly contributions for a minimum of 20 years. The Central Government co-contributes 50% of each contribution made to the pension fund or Rs. 1,000 annually, for a minimum of five years.
4. The Pradhan Mantri Vaya Vandana Yojana (PMVVY):
Only the Life Insurance Corporation of India (LIC) offers this pension plan, which offers guaranteed returns for ten years. In this LIC pension plan, an individual may deposit a minimum of Rs. 1000 and a maximum of Rs. 15 lakhs.
The subscriber of the Pradhan Mantri Vaya Vandana LIC pension scheme should be 60 years or older. The plan offers a guaranteed annual return of 8% on the deposit.
On premature withdrawal, a 2% charge is deducted. In the event of incompletion of the term due to the beneficiary passing away, the principal sum is transferred to the nominee.
5. Indira Gandhi National Old Age Pension Scheme (IGNOAPS):
Keeping in mind the social security of senior citizens, this pension plan focuses majorly on providing it through assured income. Indira Gandhi National Old Age Pension Scheme is one of the best pension plans in India that assists the initiation of economic and social development in society.
This pension plan provides income for disabled people, widows, and senior citizens. The applicants should belong to low-income groups or BPL. They must be 60 years or older.
This program is a non-contribution government pension plan and the recipient is not required to make any payments to earn a pension.
A recipient between the ages of 60 and 79 will earn Rs 200 each month. The recipient will receive a sum of Rs. 500 if they are over the age of 80.
Post-employment pension plans are quite important and the need of the hour. These programs are designed to give employees social and financial security as they age.
For many people, retirement years are their golden years. The best retirement plans are abundantly available in India to help you live the retirement life of your dreams.