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Your Comprehensive Guide to Retirement Plans in India

Retirement plans in India are the investment plans where you invest a part of your savings regularly and let it grow over time. The primary purpose of this plan is to provide financial security after retirement. The best retirement plans let you spend your post-retirement life with dignity and not have to compromise your living standard. Since the cost of living increases with inflation, buying retirement plans in India is fundamental.

A steady income source after retirement can solve most of your problems. However, to equip yourself with the best retirement plans, you must have an adequate understanding of how retirement plans work and how they may affect your life. Let us now look at how retirement plans work.

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How Retirement Plans in India Work?

A retirement plan can help you provide a stable and regular income post-retirement. It can be your fallback option during emergencies. Just like other investment plans, you have to pay a premium for retirement plans in India. And these premiums paid are accumulated over time in a fund of your choice.

When the retirement plan reaches its maturity, you become eligible to avail of the retirement benefits. These benefits can be received in the following three ways: –

  1. You can withdraw the complete amount in one go.
  2. You can purchase an annuity plan.
  3. You can withdraw the partial amount and use the remaining to invest in an annuity plan.

However, these days, the policyholder can surrender or discount a pension plan, for which a cancellation fee may be charged. Also, you can even earn interest on the retirement plan if you choose to surrender after 5 years. But you will be required to buy a deferred or an immediate annuity plan if you discontinue the pension plan before 5 years.

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Benefits of Retirement Plans

Retirement plans in India come with extensive benefits. Let us look at some of the key benefits of investing in the best retirement plan: –

Acts as a Financial Backup

Life after retirement can be very unpredictable. Retirement plans in India can help you prepare for such situations by providing you with adequate corpus for your post-retirement. It helps you can your family to stay financially secure for the future.

Cost Savings

By planning your retirement at an early age, you can enjoy the benefit of paying lower premium rates. A retirement plan, being a long-term plan, can be fruitful if you give it enough time. On the other hand, if you invest later in life, the investment period will be lower, resulting in a lower return on investment.

Helps Beat Inflation

Since the cost of living increases with inflation, it can be difficult to fulfil your financial needs after retirement with just your savings alone. Retirement plans in India can help you build enough funds, where you will not have to compromise your standard of living.

Tax Benefits

Retirement plans in India can help you save taxes. For some retirement plans, you can avail of tax exemptions under section 80C of the Income Tax Act of India.

Types of Retirement Plans in India

There are a variety of retirement plans available in India. Let us look at a few of them: –

Deferred Annuity

This annuity plan lets you build a corpus by paying a single or regular premium. It helps you save a significant sum as a pension. You can also avail of tax benefits under this plan.

Immediate Annuity

An immediate annuity is paid right away. After depositing a lump sum amount, you can start receiving the annuities immediately.

Life Annuity

This type of retirement plan remains active until the policyholder’s unfortunate demise. If there is a ‘with spouse’ option in the plan, the pension is paid out to the spouse if the policyholder passes away.

National Pension Scheme

It is a plan offered by the government of India. By investing in this plan as an employee, you can save regularly in a pension account, which is paid out post-retirement.

Life Insurance Retirement Plans

The lump sum is paid out to the policyholder’s family after his demise. However, the insurance payout in this plan is lower compared to a standard insurance plan.

It is advisable to invest in retirement plans early in life to receive maximum benefits. Make sure to read the policy documents carefully to find the best retirement plans. Max Life Insurance is a trusted brand that offers retirement plans and different types of life insurance policies at an affordable rate. Their pension plans are reliable and come with extensive benefits.


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