A retirement plan is also known as a pension plan or pension scheme is an essential need of any individual’s life to facilitate post-retirement duration with a regular income stream. The demand for the pension scheme is increasing every day in India especially after the coronavirus outbreak and with the enhancement of other factors like inflation, medical expenses, etc.
This increase of uncertainty in life makes a retirement plan valuable as the current inflation in India is about 6.4% which is almost double in the last 5 years. Another major reason that makes a pension scheme valuable is the weak social security options in India. These options are regulated by the government body and play a crucial role in providing basic life necessities to citizens in case of any mishap and not having any income sources in the family.
With all these factors, the pension scheme is a necessary need for securing the post-retirement period and covers almost all the uncertainties with vast features. Let’s have a detailed look at the features of the retirement plan.
Features of Pension Scheme
1. Scope and terms coverage
There are generally two modes of pension scheme that are immediate mode and carry over mode. In the immediate mode, the payouts are started soon after the plan is purchased by the insured person. On the other hand, in carryover mode, the payouts are done after the maturity period.
In the carryover mode, the coverage scope conditions must be fulfilled to claim the payouts. The amount is paid in lump-sum during carryover mode, unlike immediate mode.
2. Partial withdrawal options
It is one of the most essential features of a pension scheme and one must not take any retirement plan without this feature, especially a plan with carry-over mode. This feature allows you to claim a partial payout during the ongoing scheme tenure in case of any mis happenings or emergencies.
Some retirement plans provide additional bonuses in case of partial withdrawals too, providing the seriousness of mis happenings and emergencies.
3. Limited premium payment term
Limited premium payment term provides the insured person the facility to pay the premiums on preferred durations as discussed at the time of purchasing the pension scheme instead of regular payments.
A pension scheme having a limited premium payment term auction provides the same benefits and bonuses as in regular payment term options. There is no differentiation of any kind except the premium payment terms.
4. Minimum Guarantee
All the best pension schemes offer a minimum guarantee amount that is received by the insured person after the completion of retirement plan tenure. According to IRDA guidelines, all pension schemes should consist of “on zero returns” either on premiums or maturity benefits.
Almost all companies, on completion of the policy period, provide a minimum of 1% as a guaranteed amount by respecting IRDA guidelines.
5. Surrender Value
Surrender values of features that only comprise pension schemes with life insurance functionality in them. Although it is not advisable to surrender any pension scheme before or majorly after completion of the minimum grace period of the retirement plan. Still, if any insured person wants to leave the plan then they get surrender value calculated as per premium paid and total fund value of the scheme.
Most companies have the policy that during the surrender of a retirement plan, they don’t provide any additional benefits promised on individual terms.
Best Pension Scheme Available in India
Here’s a list of best retirement plans available in India that provides higher returns with unique features and vast benefits and bonuses.
1. Pension4Life Plan by Canara HSBC OBC
Pension4Life Plan by Canara HSBC OBC is a traditional pension scheme that comes with a unique feature of immediate annuity option. Immediate annuity option comprises a series of regular payouts for the complete lifetime of the insured person. Annuity payouts start within next year or next quarter etc. depending upon the option you select after the completion of the lump sum premium amount.
This retirement plan also facilitates the insured to select different policy amounts as per the requirement. And within the selected plan there are a vast variety of benefits also available like death benefits, maturity benefits, surrender benefits, survival benefits, loyalty booster, loan facility, and higher annuity payouts for the high purchase prices.
2. SBI Life Saral Pension plan
SBI Life Saral Pension plan is a traditional pension scheme that comes with an individual, participating and non-market linked options within the plan. It mainly focuses on larger wealth creation with compounding and at the same time protects the insured from market volatility and fluctuations. It is a participating plan that means the insured also gets benefits from company profits as a dividend.
There are various unique benefits except for common ones that come along with this plan like vesting bonuses, guaranteed bonuses for the first five years of the policy, etc. The minimum premium payout of this pension scheme is Rs7500 that is designed and changed as per the current market necessary needs.
3. HDFC Life – Click2Retire
HDFC Life – Click2Retire is a Unit linked insurance plan that provides market-linked higher returns with no compromises in the future protection of funds of the post-retirement period. It also comprises an online functionality where you can approach experts for the market investments to withdraw higher returns by avoiding market volatility and fluctuations.
The plan provides vesting bonuses along with additional market gains. It also comprises maturity benefits with the lowest maturity of 45 years and maximum also goes up to 75 years unlike other pension schemes with ULIP plans. In case of odd demises, death benefits are also provided with 105% margins on the total premium amount paid and funds value.
4. ICICI Pru – Easy Retirement
ICICI Pru – Easy Retirement is an insurance cum investment plan that provides a regular income stream to the insured person by investing in equity markets. This plan is known for generating higher returns during a long-term tenure from the equity markets and providing protection from market volatility and fluctuations.
This pension scheme comprises a minimum annual premium of Rs 48000 along with the lowest maturity rate of 35 years and goes maximum up to 70 years. The minimum vesting age in this plan is 45 years and the maximum is 80 years. The plan is also eligible for tax benefits on both premium and withdrawal.
A well-planned retirement plan is always fruitful in the post-retirement duration of your life. It is essential in the current scenario when there is very much uncertainty of life along with higher inflation rates.
Today the most crucial facility of health and medication is also raised especially after the coronavirus outbreaks. In these conditions, it’s a bit of sane advice to cover yourself with the best pension scheme. This guide helps you with selecting the best retirement plan by providing detailed aspects of the best-performing pension schemes in India.