To list down a few
1) PPF
2) NPS
3) Pension Plan
4) PF
In this section we will be discussing pension plans.
Pension Plans are savings that cater to your life after retirement. The amount you put in Pension Plan is locked till you retire (Say 55 years).
They are very much different from Life Insurance Plans. Life insurance plans aim at covering the risk from an unfortunate event. Pension plans on the other hand work on the opposite scenario that if an individual survives beyond an age (retirement age), he will need to provide for himself.
After you retire you can withdraw the entire savings, or withdraw a part of it and get the remaining as a pension. This plan is ideal for those working in private sector where we don't have any retirement benefits/schemes. Also it helps save tax. Yes most of us might not be knowing that savings under pension plan are eligible for tax deduction under Sec 80 CCC (upto a max of 10,000) and this is separate from premiums you pay for your life cover (Sec 80 C) or medical cover (Sec 80 D).
While Conventional pension plans invest a major portion of the premium monies in bonds and government securities (G-Secs), hence offering much lower returns of 5%-6% per annum (plus tax benefit) , Unit Linked Pension Plans, though riskier, offer much higher returns (but the tax benefit is not applicable here).
So which plan to buy? What premium to go for? All this will be covered in upcoming posts. Stay tuned.
Pushkin Gupta
http://learningsofanamatuerinvestor.blogspot.com/
Insurance is investment...unfortunately many of us are not aware of this. This blog intends to help you understand the essence and importance of getting insured in a very simplistic way.
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