Know the various types of retirement pension plans…

• After retirement, everyone needs a flow of money to maintain their existing lifestyle. Everyone knows how important it is to plan for your retirement, but is often clueless where to begin. One of your first steps should be to estimate how much income you’ll need to fund your retirement. That’s not as easy as it sounds, because retirement planning is not an exact science where you put a formula and you get the exact answer. Your specific needs depend on your goals and many other factors. There are many private and public insurance companies that offer retirement pension plans to take care of your expenses during the retiring days. These pension plans offer other benefits like tax savings as well.

• The article discusses what pension plans are and few types of plans available in insurance market.

• Retirement pensions also known as annuity plans are designed to offer regular income to people after retirement. These pension plans allow the policyholder to choose the date from which they can start receiving the pension. It need not be after retirement, at times can be earlier as well. Insurance companies offer some of the best pension plans to customers with customized benefits that will fulfill their requirement and most importantly fit into the budget.

• Immediate Annuity• In Immediate Annuities, consumer has to make a one-time investment in

lumpsum and they receive a regular payout called “pension” for the rest of their lives. The pension can start with immediate effect as well which could be monthly, quarterly, semi-annually or yearly. These plans are ideal for those who wish to ensure they receive regular income after retirement. But you can’t withdraw the investment amount or cancel the annuity.

• Deferred Annuity • In deferred annuity the payment of income are delayed until the investor

choose to receive it. There are two phases: Savings or accumulation phase and income phase. In saving or accumulation policy holder pays premium at regular intervals for specific term. At the end of phase, the income phase begins wherein 1/3rd of the money accumulated can be withdrawn, while the remainder is used to buy an annuity product.

• Traditional Retirement Pension Plan• In these plans, the investment is mostly in debt-oriented funds such as

government securities. Low risk associated with such financial products makes these plan most preferred option for risk-averse investors.

• ULIPs • These are designed for those who want to plan their retirement early. Due to

market-linked fund the returns expected could be higher compared to traditional retirement plans. Under ULIPs investors can choose to allocate their investment in various asset classes such as equity, debt or balanced funds.

• Tax Benefits• Under section 80CCC, income act 1961 the contribution towards pension funds

can be deducted from the gross income, leading to tax savings. As of 2015, the maximum deduction allowed for investment in pension funds would be Rs 1.5 lakh per annum.

• One of the important advices would be plan for your retirement early. This way you will get to experiment with funds well enough and gain profits in time. You will also enjoy the benefits of compound earnings. While considering ULIPs never get too emotional and pool all your money in one particular fund, else sell funds due to any panic all. Also, consult your financial expert who have studied market well, its volatility and future projections before picking the best Retirement Plans of your life.

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