pension plan

Pension plan

The pension plans are also known as the retirement’s plans that offer the dual benefits of investment as well as the insurance coverage. In pension plans, a certain amount of money is invested by an individual on a regularly basis which will keep accumulating when invested in a phase by phase manner. Thus after the individuals retires from their job, these pension plans ensure that there will be a regular flow of income on a monthly basis so that they don’t have to face any financial instability. One of the most popular examples is the provident fund.

Now there are various types of the pension plans. But here we are motioning four such pensions you might not have even heard of them and the tax benefits that they provide.

  • National Pension Scheme

This is a new pension scheme in which the savings of an individual are invested in debts as well as the equity market, depending on the preference of that particular individual. Thus the person can withdraw 60% of the funds after they retire and can use the remaining 40% for the purchasing of the annuity and its maturity amount is tax free.

  • Deferred Annuity

This pension plan allows accumulating a corpus either through a single premium or a regular premium over the duration of the plan. And once the term of the policy gets over, the pension begins.  The tax benefit associated with this is that till the time an individual is making investments in this plan, no tax is charged on it, until the plan is withdrawn. Once can buy this scheme by either paying regularly or by paying all at one time.

  • Immediate Annuity

As the name suggests, in this type of scheme, the pension begins as soon as a lump sum of amount is deposited. And the amount of pension that will be received depends entirely on the amount of money that is invested by the policyholder. Also the policy holder gets to decide the range from the annuity options. Now under the Income tax act 1961, the premium that is invested in the annuity plans are basically tax exempt. And after the death of the policy holder, the entitled money goes to the nominee.

  • Pension Funds

The PFRDA has given authority to six different companies who will be operating as fun mangers and will provide such plans that have comparatively better returns to give at the time when the plan gets matured and that they remind in force for significant time duration. And they come with promising tax benefits that can be availed by any policyholder.

Conclusion

Thus starting early for your pension plans is a very wise option. Planning for your retirement’s right from the beginning ensures financial stability at the time of your retirement and also it promises for a secured future.