Do you have a retirement pension plan?

Every indi­vid­ual should plan their retire­ment effec­tively. A retire­ment pen­sion plan is a must for each and every indi­vid­ual. Retire­ment pen­sion plans are mainly pro­vided by Insur­ance com­pa­nies that pro­vides reg­u­lar pre­mium post retire­ment phase or no income phase. Let’s first under­stand what is a retire­ment pen­sion plan?

What is retire­ment pen­sion plan?

Retire­ment pen­sion plans are insur­ance schemes which help an indi­vid­ual to cre­ate a retire­ment cor­pus. An indi­vid­ual opts for a plan and cre­ate a retire­ment cor­pus by invest­ing in the retire­ment fund for a num­ber of years. On matu­rity of the retire­ment plan, a reg­u­lar income is gen­er­ated for the individual.

Why retire­ment pen­sion plan?

Post retire­ment, an indi­vid­ual does not have reg­u­lar income but he/she has to meet the monthly expenses. Hence a retire­ment pen­sion plan becomes extremely impor­tant and critical.

Exam­ple of a retire­ment pen­sion plan

Let us take an indi­vid­ual aged 25 years want to invest in a retire­ment pen­sion plan with a sum assured of Rs 600,000. Tenure of invest­ment is 35-years. Every year he has to pay an yearly pre­mium of 15,000. For any even­tu­al­ity, the ben­e­fi­ciary of the indi­vid­ual will get the sum assured of Rs 600,000. Post com­ple­tion of 35 years, the indi­vid­ual can decide on the option of receiv­ing monthly/quarterly/half-yearly pension.

Where does a retire­ment pen­sion plan invest?

Con­ven­tional pen­sion plans invest a major por­tion of the pre­mium monies in bonds and gov­ern­ment secu­ri­ties (G-Secs) whereas a ULIP based or mar­ket linked pen­sion plan invest in equity markets.

Should I invest in a retire­ment pen­sion plan?

Yes, if you do not have a retire­ment pen­sion plan, start invest­ing in a retire­ment pen­sion plan. Retire­ment pen­sion plan will help you in secur­ing your future and will pro­vide a monthly income post your retirement.

Related posts:

1. 8 steps to plan for your retirement
2. Retire­ment Plan­ning – Why you should start right now?
3. Retire­ment plan­ning — A must read
4. Uni­ver­sal Life Plan – A new offer­ing by life insur­ance companies
5. Sys­tem­atic Invest­ment Plan (SIP) — The best way to invest