Retirement Plans

The age when you start receiving the pension from your insurance-cum-pension plan is called as vesting age.

The Defined Contribution is a plan in which both the employee and the employer contribute a predetermined percent of the individual’s salary, on a regular basis. These contributions are deposited in a personal account set up under the employee’s name and are invested in funds chosen by the employee. Under this plan the amount contributed is fixed but the benefit is not as the returns depend on the performance of the invested funds.

The Defined Benefit Pension plan is an employer sponsored retirement plan where the retirement benefits are pre-determined and is calculated by taking into account various personalized factors such as Employee’s age, earning history, duration of employment, etc. In a Defined Benefit plan the employer promises a monthly benefit on retirement to its employees.

While starting early in life has its own advantages, it’s never too late start saving. With increasing life expectancy rate, the post retirement period has become an important phase which requires serious planning. After retirement, you may not have a regular income, but your expenses would still exist. Being financially dependent on children was a thing of the past. A responsible and independent person would always prefer to be financially independent, hence it is important to build a corpus of funds for stress free and enjoyable retired life.

With increasing life expectancy rate, escalating healthcare cost and lack of government subsidies in India, it becomes crucial to have funds for your post-retirement life. Pension plans are a good tool to help you build a corpus of funds which offers you either a lump sum amount or a regular income to take care of financial needs during your golden years.

There are two variants in pension plans:

Some of the features of Pension Plan are:

The National Pension Plan (NPS) is an initiative of the Government of India to encourage people to voluntarily save for their retirement. Under this defined-contribution pension system (NPS), your savings will be pooled in a pension fund which is invested in diversified portfolios such as corporate debentures, shares, government bonds and bills. Under the NPS the subscriber is allotted a unique Permanent Retirement Account Number (PRAN), under which all his account information is maintained and transactions carried out.