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How to Find the Best Retirement Plans in India

After working for a major part of one’s life, retirement can be one of two things depending on how much time you spent planning for it—a beautiful second inning, or a struggle to meet expenses. We all want the former, right? And without having to worry about finances as long as we live. However, to do that we need to make certain investment decisions that guarantee that we can retire with complete peace of mind that no matter what, our financial future is protected.

One of the ways you can ensure that financial future post-retirement is by investing in the best retirement plan that can not only safeguard your financial future, but also lets you do so much more, like taking that dream vacation to that exotic land you had always wished for, but never had the time.

In this article, we will help you understand retirement plans in general to help you choose from the best retirement plans in India so that you can invest in your future with complete confidence without second guessing your investment decisions.

What is a Retirement Plan?

A retirement plan is designed to ensure that your retired life is free of financial worries and all of your requirements post-retirement are met. This could include living expenses, medical emergencies, etc. By ensuring that you are not devoid of steady flow of funds once you have stopped working, these plans help you enjoy a fruitful retired life by making you financially independent.

There are generally one of two ways that a pension plan can be created:

  1. By the Employer: This is when your employer creates a pension fund for you by making regular payments into the employee’s pension fund to create a corpus that is paid out at annuity. In this case, the employer makes the larger contribution to the fund.
  2. By Yourself: This is highly advised even if you have a pension fund with the employer. It will further strengthen your financial standing post-retirement. You must invest in the best retirement plan to safeguard your financial future by safely replacing your monthly salary with a regular guaranteed income post-retirement.

Now that you are aware of what a retirement plan means and why it’s important to invest in one. Let’s look at how it works to get a better understanding on how it helps you in becoming financially independent.

How Does the Best Retirement Plan Work?

Firstly, it’s an investment; therefore, you need to make regular investments into the best retirement plan to build your corpus over a period of time. The premiums that you pay are accrued in assets or funds of your choice, and you need to stay invested for a set period.

This amount that gets accumulated is given out as pension benefits once the plan has matured, and you have the flexibility of utilizing this fund in 3 ways:

  1. You can withdraw the complete amount at the same time.
  2. Opt-in for an annuity plan
  3. Partially withdraw funds and use the remaining amount for purchasing an annuity plan

By giving you the flexibility to choose how you want to use the fund, it lets you decide whether you want your money upfront or in the later stages of your life. Even if you surrender the best retirement plan after 5 years, you will continue to earn interest on that plan. However, it’s best to stay invested to secure your financial future, because the investments that you make today, will help you create a better tomorrow.

Types of Retirement Plans in India

You have a range of choices when it comes to retirement plans and types of investment, and having a bit of knowledge on each one of them can help you make better choices.

Deferred Annuity

Under this plan, the policyholder needs to pay a single of daily premiums to build a corpus.  It’s good for people who want to create significant savings as pension under the scheme.

Immediate Annuity

These type of retirement plans in India pay right away. The policyholder needs to make a lumpsum deposit to receive annuities immediately. This is best for people who either didn’t invest early on or want to ensure extra funds post-retirement.

Annuity Certain

This is the best retirement plan in India as it offers regular payouts which the policyholder continues to receive for a set number of years under the pension plan. The added flexibility of being able to choose the payment duration is another highlight of the scheme is a big plus. Under the scheme, in case of unfortunate passing away of the policyholder, all investments made are paid back to the nominee (s).

Life Annuity

These types of insurance plans remain active till the policy holder is alive and comes ‘with spouse’ option that makes the policyholder’s spouse eligible to receive pension in case the insured passes away.

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