The middle-class Indians are the ones who suffer the most from inflation and economic disruption. The thought of not having nothing set aside for our future sends shivers up everyone's spine. This leaves a lot to learn about retirement and pension plans as they help individuals plan their lives and ensure financial stability. Being financially stable is necessary, especially during our old age when we have stopped working completely. With no source of earning, it becomes challenging to manage our expenses. That is where pension plans play a dominant role.
Also Read - What is Pension?
5 Reasons to Invest in the Best Pension Plan
There are a lot of benefits that pension plans offer to individuals. Some of them are as follows:
1. A steady flow of income
A pension or a retirement account ensures that you can have a steady stream of money until you retire. You will then be able to live a more comfortable and relaxed life. Certain conventional strategies also have benefits.
Learn how to ensure a regular income stream for your family.
2. Weak social security in the Indian subcontinent
In contrast to other nations, India lacks a social security system (Social security refers to actions taken by the Indian government or governing body.)
When all other sources of income have been exhausted, these steps are usually taken to provide income to the client or his relatives. In India, only a few schemes and programs address the needs of the elderly, such as retirement plans and other schemes.
3. Inflationary pressures and rising health prices
Inflation harms our economy to the point that the price of everyday goods and services has risen over time. Having a pension plan would certainly relieve any stress and have financial stability until you retire.
4. Tax advantages
Purchasing a pension scheme at a young age is always a good idea. You can also get tax incentives under the terms of Section 80C of the Income Tax Act if you do so.
5. Increase in life expectancy rate
According to the World Bank, India's life expectancy in 2017 was 68.78 years. In the last 20 years, life expectancy has risen by almost ten years. The higher the life expectancy, the more money would be required in old age or after retirement.
What are Pension Plans and What are the Different Types of Pension Plans?
Pension plans, in plain terms, are retirement plans that enable both the employee and the employer to pay a certain sum of money. These funds are put aside for the good of the employee. This money is then returned to the employee as he or she retires.
A few pension plans in which an employee can choose to contribute a portion of his current income will potentially benefit him and his family as he retires.
Pension schemes are the most widely used. The Indian pension scheme is made up of three parts. Civil servants' pensions, mandatory pension schemes administered by the Employees Provident Fund Organization of India, and the National Social Assistance Programme for the unorganized sector together make up the Indian Pension Plans.
The most common pension plans in India are listed below. To choose the most effective option, you first must become familiar with the various plans available and choose the one that best suits your needs.
1. Immediate annuity
This scheme requires a lump-sum investment, and the pension payments begin immediately. Also, there are deferred annuity plans that allow you to build up a substantial sum of money throughout the policy's life by paying daily or single premiums. When the policy term's maturity period has ended, the pension will continue. There is also a tax advantage of this sort of scheme.
2. Pension plans that provide cover
These plans contain life insurance as one of the benefits provided to the customer. This means that there will be a lump-sum payment process given to the family members of the policyholder in the event of their death.
3. Pension plans that don't provide cover
In this case, no life insurance is provided to the customer when they opt for the pension plan. Only the premiums charged or the money spent is returned to the nominees. The money may or may not be repaid with interest.
4. National pension scheme (NPS)
The NPS scheme allows people to prepare for retirement by saving in the stock and bond markets, depending on their preferences. 60 percent of the funds will be withheld at maturity, and the remaining 40 percent must be used to buy an annuity contract.
Pension and Retirement Plans by Canara HSBC Life Insurance
A well-thought-out retirement strategy will help you avoid the worries of rising inflation and living costs in your golden years. The key to a happy retirement is to prepare ahead of time and take advantage of the best pension options available.
Canara HSBC Life Insurance offers various plans to its customers, keeping their needs and requirements in mind. Some of them are:
This policy offers a variety of annuity choices from which to select. You may also choose between receiving an instant or delayed annuity. This package has a fixed lifetime income that is deposited directly into your bank account. There is also the possibility of receiving monthly payments for the rest of your life or the life of your wife.
2. Guaranteed Savings Plan
It guarantees coverage at retirement and offers life insurance for the full term by only charging premiums for a short time. There's even more security for the families in the event of an accident or death. Customers should also choose a payment term that is most convenient for them.
Learn more about Guaranteed Savings Plan.
After considering all the policies and plans, customers can make an informed choice and financially secure their future with savings and a steady income. It is always better to think of the future as no one knows what may happen in the future and how their life may take a turn, leaving the rest of the family financially weak.
With all the pension plans and schemes offered in today's day and age, both online and offline, customers can easily purchase one based on their needs.