Pension plans in India is becoming popular now a days. Many peoples wanted to know the best pension plan out of the available list in India. In this article we have listed how to choose a best pension plan in India and its pros and cons.
We have two phases in a pension plan. One is accumulation phase where we generate money and start investing for our better future after retirement and the other one is where we use returns of the invested amount for our rest of life.
Both these phases of life require planning and analysis for an overall growth. To accomplish your financial wealth at the time of retirement, you can take help a pension plan in India and start investing money to it. But, before that we request you to go through this article to understand how a pension plan works and how it can help you for your retirement.
Type of pension plans in India
Pension plans are offered by most of the insurance companies like LIC. But, generally these are of two types.
The first one is called deferred annuity plan. In deferred annuity, you start investing periodically into these funds and at the time of retirement you get periodic return from these companies. Some of these popular deferred pension plan products are LIC Jeevan tarang, LIC Jeevan Nidhi.
The second plan is known as annuity plan where you pay a lump sum amount to the insurance companies and in return every month or quarter or year you get pension. Popular pension plan in this category is LIC Jeevan Akshay VI.
Pros and cons of pension Plan
- In India, we have better investment options compare to a pension plan. Rate of return at the end is very less compare to any traditional investment plans. You can invest into a public provident fund with a long term view instead of a pension plan.
- You can not avail loan by keeping your pension plan as security.
- No surrender value will be available once you have taken the policy.
- You can not withdraw entire amount invested into a pension plan if needed.
If you want a better secured long term investment plan with high return then we recommend you to choose either a PPF or normal LIC option for you. You can invest your money in real estate to get good return at the time of retirement. Our suggestion is to stay away from these pension plans.