What is pension? Has this question come to your mind? In case you are self-employed, then you must already be wondering about how to secure your future financially with a suitable pension. However, building this income stream requires you to choose from several options already available in the market. Here’s a look at a few of them.
Top Pension Plan Choices for You
These are some of your best possible choices:
- Retirement Plans- Several Indian insurance companies offer these plans to their customers. These help you get the benefits of market-linked investments in a variety of instruments (as per your risk preferences and choices) along with a steady pension after you retire. So, how does it stack up? For starters, there is abundant life insurance coverage for the whole period of your policy. The money you invest will get you tax benefits under Section 80C, and the final corpus will be divided into a lump sum payout and annuity (usually in a 60-40 ratio). You can then expect to earn a steady income each month. What if you get a lump sum amount only when you retire or reach the end of your working life? You can put it into an immediate annuity, and the pension will begin right away.
- ULIPs- These unit-linked insurance plans come with the same tax deductions as per Section 80C. At the same time, you can not only choose the funds you wish to invest in but also switch them along the way. This should be done based on how much risk you are willing to take and your evolving life goals. At the same time, you can expect substantial life insurance coverage across the whole policy tenure. These plans are helpful in building a hefty amount that will help you retire comfortably in the future.
- NPS- Many self-employed people also choose the NPS or the National Pension Scheme as it is known. One advantage is that it is supported by none other than the Indian Government. You can select the mix of your investment as per your risk quotient and switch between diverse options. You can partially withdraw money during the investment tenure for various purposes like higher education for children, medical treatments, or weddings. You can eventually build a corpus that is sufficient to give you a regular pension income after retirement. You can get tax deductions on your contributions up to Rs. 1.5 lakh.
- Atal Pension Yojana- Aimed at revolutionizing retirement benefits of unorganized sector professionals, it offers anywhere around Rs. 1,000 to Rs. 5,000 as pension (guaranteed) where the Government also puts in either 50% of your contribution or Rs. 1,000 per year (whichever is lower) for a duration of five years. 18-40 years is the plan’s age limit.
- PPF- These are strategic investments that require regular contributions from you. The lock-in period for your investment will be 15 years in total. This can be extended in 5-year blocks, too. The contributions are tax-free under Section 80C up to Rs. 1.5 lakh, while the interest income and maturity amount are also tax-exempted.
Take a closer look at all these options and then plan your retirement strategy carefully for the future.