If you go back a decade ago, pension planning or pension plans in India would mean investing only in long-term government instruments such as PPF or a fixed deposit. But, now, with the advent of the various new investment products and the modern lookout towards retirement planning and pension funds, invests are opting to invest in various instruments such as the pension plan.
Let’s take a look at some of the benefits of pension plans:
Savings for the Long-Term:
Pension plans in India have undergone drastic transformations since their inception. Today, the market offers you pension plans which are meant to save up for you in the long run. This is done with the premiums, which you pay either in lump sum upfront or in specific amounts periodically. What your pension plan does in return is, creates an annuity that can be further invested in. This helps to generate a steady stream of income for your retirement life.
Perhaps one of the biggest reasons why pension plans are even suggested by financial advisers is because they can help you counter the effects of inflation and fluctuations in the market trends. However, this holds true if you invest in pension plans from a very early age. The later you invest, the intensity of beating the inflation may vary.
Thus, before you buy a pension plan in India, it is crucial that you assess your plan for inflation-adjusted returns. Investing in pension plans which assure returns can help you be financially protected against the rising prices of goods and services in the future.
Goals – short or long – can be different for every individual based on their future plans, and needs. It’s a good thing that the pension schemes in India are in plenty which helps you tend to different facets of your life and goals. You can choose which suits your needs the best. Once that is done, you can then select the payment of premiums according to the funds available. You can choose to pay an ‘X’ amount periodically or pay the lump sum upfront. Options such as annuity plans are the best sought-after plans depending on your premium payment choice.
Protects the Interest of your Loved Ones:
One of the reasons why anyone would invest is to increase their financial corpus for the benefit of your interest and the interest of your loved ones. Pension plans give you an opportunity to leverage and create a pool of wealth. Pick a pension plan which offers you the dual benefit of both – insurance and monthly income to your family if something unfortunate should happen to you.