Pension schemes in India can be broadly classified into
Policies under government sectors and private sectors, provided to their employees
Policies purchased by individuals from insurance companies
Policies under social groups
In these schemes pension plans provided by insurance companies are gaining importance with an improvement in cost and quality of the living of people today. There are many companies in market today that provide pension and retirement policies with competitive benefits, returns and even services.
Familiarize yourself with few terms:-
Vesting Date: This is a date when the person starts getting income in the form of pension from his policy provider.
Participatory policy: The policy that provides separate specified returns as a part of the profits earned on investments using premiums made with their company.
Death benefit: The amount that is earned as a benefit on the death of the policy holder. This in case of pension plans includes sum insured, bonuses and guaranteed additions promised by the company.
Surrender Benefit: This is not exactly a benefit but it is the sum earned when the person withdraws the policy during the premium payment term. There will be certain minimum limit on number of years after which the policy can be surrendered.
Tax Benefit: A person can receive tax deductions as per the section 80 C of income tax act if he/she invests in pension plans. This deduction of taxable amount is definitely a benefit to the person.
Best Pension Plans:-
Many pension plans are available in the market today. To choose from the pool of options is becoming increasingly difficult. Nevertheless, LIC has been in the race for the longest time and the pension plans offered by LIC still remain the best in the market. Many of the private pension plan providers have joined the band wagon and companies like MetLife and ICICI also have attractive plans. Let us discuss a few of these plans:
LIC has four pension plans that you can choose from.
Jeevan Nidhi: This plan gives you participatory benefits after the 6th year. In addition 1/3rd of the amount available on vesting can be commuted. Along with this the policy holder gets guaranteed additions (Rs.50/- per thousand Sum assured for each completed year, for the first five years).
Jeevan Akshay-VI: This policy has onetime premium payment and the policy holder is eligible to receive pension for his lifetime. The policy can be withdrawn within a period of 15 days.
New Jeevan Dhara-I: These plans are participatory in nature and there is certain bonus that gets accrued after each financial year in a part of guaranteed benefit. There are certain other benefits that can be added along with this policy.
New Jeevan Suraksha-I: There is a term rider option available along with this policy where the nominee of the policy can earn a specified benefit on the death of the policy holder during that particular term of the policy.
Few of the latest pension plans of MetLife are as follows
Met monthly income plan:In this a policy holder can earn monthly pension for a period of about 15 years, on vesting of the policy. This policy is a participating one and there is a bonus that starts getting accrued after 3 years. This is payable on policy anniversary as per the terms of MetLife.
Met pension Par: The premiums on this policy can be limited to single payment or limit the premium payment term to as low as 3 or 5 years. Even the annuity can be chosen for over a wide range of options. The guaranteed additions (10% of total sum assured) is available on completion of premium payment terms of policies with longer periods.
Pension plans provided by ICICI are
ICICI Prulife lifelink pension single premium: This plan requires single premium payment and has a wide range of options to choose annuities. The plan is unit linked and the company also guarantees the policy holder with return as per specified NAV on the vesting of plan.
ICICI Prulife Forever life: This is a regular non participating policy where the premiums as low as Rs 6000 can be paid on annual basis and receive the sum accrued as pension during the 2nd innings of life. There are certain riders (critical illness and accident rider) that can be chosen from a person on these policies. The premiums will vary with the choice of these riders.
ICICI Pru immediate annuity: This plan also has single premium such that the annuity receivable is as low as Rs 12,000. The policy has a range of annuity payable period options and these annuities can be accessed on quarterly, monthly, half yearly and also annual basis.
Overall Benefit of pension plan:-
It is said by researchers that pension plans that are provided by insurance companies are preferred by people who are mostly self employed and also at times by people who already have other backup for the retired life but yet invest in these plans for better quality of living. People also consider this option to be a part of their investment needs wherein a plan allows them to participate and purchase units. People in India mostly are benefited through tax exemptions that are possible through these plans. These plans give a rough idea of how the future expenses can be planned and make a person an architect who designs his style of living in retired life.
Other Pension plan providers:-
There are many other pension plans available in Indian market today. Based on the needs of a person a particular plan can be chosen.
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