Retirement plans are long-term investments which help you build a large fund pool for your golden years.
For example, you can invest in the Employees Provident Fund (EPF) or the Tier-I account of New Pension Scheme (NPS) while you are employed. These plans help you save a portion of your income towards your retirement goal at the age of 60 or above.
So, if you start working at the age of 25, you could invest in these options for more than 35 years.
Similarly, life insurance companies including Canara HSBC Oriental Bank of Commerce Life Insurance offer retirement plans which can help you accumulate a large corpus within your working years.
For example, Unit Linked Insurance Plans (ULIPs), Guaranteed Savings Plan, and deferred annuity plans allow you to accumulate retirement corpus.
Once you have accumulated the corpus, you will need pension plans for the next stage of your retirement.
Pension plans are annuity plans, which convert your retirement corpus into long-term monthly income for your post-retirement life. Some of the retirement plans also allow you to use them as a pension plan after you have built the corpus.
However, if you accumulate your retirement corpus using PPF, EPF and NPS options you will need to invest in annuity plans to start your pension. Similarly, if you use ULIPs to build your retirement corpus, and your policy tenure lasts only up to 60 years of age, you will need to invest in annuity plans to start a pension.
Based on when the pension starts from the annuity plan they can be two types:
Life insurance companies offer both immediate and deferred annuity plans.